If a Country Fixes Its Exchange Rate Below the Equilibrium

question 113

Multiple Choice

If a country fixes its exchange rate below the equilibrium value,

• A) the result is an excess supply of that currency
• B) there will be downward pressure on the exchange rate
• C) its GDP will increase
• D) its GDP will decrease
• E) it will have to sell its own currency in order to eliminate the excess demand

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Definitions:

Performance-contingent Basis

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Employee Needs

The requirements or desires of workers that, when fulfilled, lead to their satisfaction and motivation, including physiological, safety, social, esteem, and self-actualization needs.

Valence

The perceived attractiveness or desirability of a reward or outcome.

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