A Potential Limitation of Freely Floating Exchange Rates Is That

question 97

Multiple Choice

A potential limitation of freely floating exchange rates is that:

• A) Countries require a larger amount of international reserves than otherwise
• B) Countries are unable to initiate economic policies to combat unemployment
• C) Exchange rates may experience wide and frequent fluctuations
• D) Demand tends to be highly sensitive to price movements

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Definitions:

Transcontinental Railroad

A railway system stretching across a continent, typically referring to the railroad completed in 1869 that linked the eastern and western United States.

Economic Policies

Strategies and decisions made by governments regarding the regulation and management of a country's economy, including tax laws, interest rates, and government spending.

Internal Improvements

Government-funded projects to develop the nation’s infrastructure, such as roads, bridges, and canals.

Ex Parte Milligan

1866 Supreme Court case that declared it unconstitutional to bring accused persons before military tribunals where civil courts were operating.