Proponents of a Freely Floating Exchange Rate System Maintain That

question 103

Multiple Choice

Proponents of a freely floating exchange rate system maintain that it is superior to a fixed exchange rate system because

• A) the balance of payments adjusts continuously to exchange-rate movements
• B) governments can establish independent monetary and fiscal policies
• C) disorderly exchange rate movements can disrupt trade and investment patterns
• D) floating exchange rates operate under simplified institutional arrangements

---

Definitions:

Martin and Nevin

A hypothetical name, possibly referring to a partnership, company, or legal case, without a specific definition absent context.

Conditional Contract

An agreement that becomes enforceable only under specified conditions.

Assignment

The transfer of rights, duties, or property from one party to another, often used in the context of contracts or real property.

Stop Payment

An instruction given to a bank by an account holder not to pay a check or payment that has been issued but not yet cashed.