Under a System of Free-Floating Exchange Rates, a Nation Will

question 32

Multiple Choice

Under a system of free-floating exchange rates, a nation will experience

• A) persistent surpluses in its balance of payments.
• B) persistent deficits in its balance of payments.
• C) a tendency toward equilibrium in its balance of payments.
• D) persistent surpluses in its balance of trade.

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Definitions:

Maximize Profits

A business objective aiming to achieve the highest possible financial gain from operations.

Economic Profit

The surplus remaining after total costs (both explicit and implicit) are deducted from total revenue, reflecting the true profitability of a firm.

ATC

Average Total Cost, which is the total cost divided by the quantity of output produced, reflecting the cost per unit of output.

Pure Monopolist

A market structure where a single seller dominates the market, with no rivals, supplying a unique product without close substitutes.