Which of the Following Statements Best Describes the Goal of a Currency

question 7

Multiple Choice

Which of the following statements best describes the goal of a currency board and the greatest weakness of this system?

• A)A currency board can instill confidence in a currency but may be useless if the anchor currency becomes devalued.
• B)A currency board can help central banks to address local problems with monetary policy, but there is no way to make sure they do.
• C)A currency board can ensure at least a moderate amount of stability in an economy but leaves central banks with no way to address local problems with monetary policy.
• D)A currency board can instill confidence in a currency, as all local currency is backed up by another currency, but there is no real way to enforce this.

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Definitions:

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A concept in social psychology that suggests an individual's self-concept is shaped by how they believe others perceive them, leading to a reflection of themselves through the eyes of others.

Charles Cooley

A sociologist known for his theory of the Looking-Glass Self, which describes the development of one's self through the perceptions of others.

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