Assume a System of Floating Exchange Rates

question 24

Multiple Choice

Assume a system of floating exchange rates.In response to relatively high interest rates abroad,suppose domestic investors place their funds in foreign capital markets.The result would be

• A) a depreciation of the domestic currency and a rise in net exports
• B) a depreciation of the domestic currency and a fall in net exports
• C) an appreciation of the domestic currency and a rise in net exports
• D) an appreciation of the domestic currency and a fall in net exports

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Definitions:

Montesquieu

A French political philosopher of the Enlightenment era, best known for his theory of separation of powers.

Voltaire

Voltaire, the pen name of François-Marie Arouet, was a French Enlightenment writer, historian, and philosopher known for his advocacy of freedom of speech, separation of church and state, and civil liberties.

Intolerance

A lack of acceptance or respect for differing views, beliefs, or behaviors.

Persecution

The act of harassing or oppressing someone, especially because of their race, religion, gender, or political beliefs.