When Market Forces Start to Change a Fixed Exchange Rate

question 24

Multiple Choice

When market forces start to change a fixed exchange rate, the government:

• A) must buy or sell currency to bring the market back to the fixed rate.
• B) holds the exchange rate constant at the new equilibrium.
• C) only intervenes if the change in the exchange rate would harm export-focused domestic industries.
• D) None of these are true.

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Definitions:

Development Of Flexibility

The process of increasing the range of motion of muscles and joints through various exercises and stretching routines.

PNF Stretching

Proprioceptive Neuromuscular Facilitation; a stretching technique used to enhance both active and passive range of motion.

Range Of Motion

A joint's total capacity for movement, typically involving its ability to extend and bend.

Static

Relating to or characterized by a lack of movement, change, or development.