A Country That Uses a Fixed Exchange Rate to Undervalue

question 61

Multiple Choice

A country that uses a fixed exchange rate to undervalue its currency will:

• A) increase its exports.
• B) encourage capital flow to foreign countries.
• C) increase the price of imports for domestic consumers.
• D) All of these are true.

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Definitions:

Premium

The amount paid for an insurance policy or the fee charged by insurers for providing coverage.

Comprehensive Coverage

A type of automobile insurance that provides protection against loss when the insured’s car is damaged or destroyed by fire, lightning, flood, hail, windstorm, riot, vandalism, or theft.

Actual Cash Value

The amount equal to the replacement cost of damaged or stolen property minus depreciation.

Liability

The condition of being legally accountable for certain actions or responsibilities, particularly regarding financial debts or legal duties.