Under a Fixed Exchange Rate System

question 108

Multiple Choice

Under a fixed exchange rate system:

• A)a foreign exchange market does not exist.
• B)central bank intervention in the foreign exchange market is not necessary.
• C)central bank intervention in the foreign exchange market is oFten necessary.
• D)central bank intervention in the foreign exchange market is not allowed.

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Definitions:

Monopoly Power

The ability of a company or entity to control or dominate an industry or sector, often to the point where competition is significantly reduced or eliminated.

Federal Antitrust Laws

Laws enacted by the federal government of the United States to eliminate or prevent anti-competitive practices, ensure fair competition, and protect consumers from monopolies and cartels.

International Commerce

The exchange of goods and services between countries around the world.

Horizontal Price-fixing

An illegal agreement between competitors to set prices at a certain level, rather than allowing them to be determined by market forces.