Which of the Following Problems Will Most Likely Occur with a System

question 30

Multiple Choice

Which of the following problems will most likely occur with a system of flexible exchange rates?

• A) macroeconomic instability as exports and imports fluctuate with the exchange rates
• B) government favoritism toward selected importers of goods and services
• C) the emergence of black markets for foreign currency
• D) distortions in trade patterns away from the pattern suggested by comparative advantage

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Definitions:

Shares Outstanding

The sum of all shares of a company currently held by its investors, encompassing both large block holdings by institutional investors and shares that are under restrictions.

Liquidating Dividend

A type of dividend paid by a corporation out of its capital base, as opposed to its earnings, often signaling the company is dissolving.

Dividend Policy

A company's approach to distributing profits back to its shareholders, dictating how much to pay out as dividends and how often.

Alternate Dividend Policy

A strategy used by a company to vary its dividend payments to shareholders based on its earnings or investment opportunities.