If a Country Fixes the Exchange-Rate Value of Its Currency

question 126

Multiple Choice

If a country fixes the exchange-rate value of its currency, it will have to

• A) follow a highly expansionary monetary policy in order to maintain the convertibility of its currency.
• B) give up its monetary independence in order to maintain the convertibility of its currency.
• C) fix its domestic interest rates in order to maintain the convertibility of its currency.
• D) raise taxes in order to maintain the convertibility of its currency.

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Definitions:

Political Competency

The knowledge, abilities, and skills required to effectively participate in and influence the political process.

Interactional Competency

The ability to effectively communicate and interact with others, recognizing and adapting to social cues and norms.

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