Economist Charles Kindleberger (A Proponent of Fixed Exchange Rates Mentioned

question 73

Multiple Choice

Economist Charles Kindleberger (a proponent of fixed exchange rates mentioned in the textbook) would agree with which of the following statements?

• A)It is better to leave the international value of the domestic currency to the free market forces than to have to sacrifice domestic economic goals in order to support a certain predetermined value of the currency.
• B)There is too great a chance that the supported exchange rates will diverge significantly from the equilibrium exchange rates, which would create persistent problems and lead to an overall decrease in international trade.
• C)With no certainty of what one nation's currency will be worth in terms of other nations' currencies, international trade is held below what it could be.
• D)A flexible exchange rate system is more stable than a fixed exchange rate system.

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Definitions:

Cost Of Capital

The rate of return a company must earn on its investment to maintain its market value and attract funds. It represents the cost of a company to secure funds, whether through debt or equity.

Capital Component

One of three sources of capital: debt, preferred stock, or equity.

Required By Investors

Refers to the expectations or conditions that investors demand before committing capital to an investment.

Capital Structure

The combination of borrowing and ownership investments utilized by a company to finance its activities and expansion.