If Thailand Fixes the Foreign Exchange Value of Its Currency

question 116

Multiple Choice

If Thailand fixes the foreign exchange value of its currency and follows a highly expansionary monetary policy,

• A) Thailand will be unable to maintain both the fixed-exchange rate and the full convertibility of its currency
• B) Thailand will experience rapid economic growth.
• C) it will be easier for Thailand to engage in international trade.
• D) Thailand will have relatively low rates of inflation.

---

Definitions:

Financing Cost

The total expenses incurred by a company to borrow funds, including interest payments, fees, and other charges associated with obtaining financing.

Dividend Growth Model

The Dividend Growth Model is a method used to estimate the value of a company's stock by assuming a constant growth in dividends per share.

Cost of Equity

The return a company theoretically pays to its equity investors to compensate them for the risk they took by investing their capital.

Growth Rates

Measures of how much a particular variable, such as population, sales, or GDP, has increased over a specified period of time.