One Advantage of a Floating Exchange Rate System Compared to a Fixed

question 12

Multiple Choice

One advantage of a floating exchange rate system compared to a fixed or managed float exchange rate system is

• A) it is easier for central banks to control inflation.
• B) there is no need for government intervention.
• C) it allows greater exchange rate stability.
• D) it eliminates the possibility of depreciation during a recession.

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Definitions:

Dialectical Reasoning

A method of argument that involves the contradiction between two interacting forces, leading to their resolution and the development of a synthesis.

Contextual Intelligence

The ability to understand the limits of our knowledge and to adapt that knowledge to an environment different from the one in which it was developed.

Formal Reasoning

The process of following a set of rigorous procedures or rules to arrive at a conclusion, often used in mathematics and logic.

Inductive Reasoning

A method of reasoning in which specific observations or measurements are used to make general conclusions or theories.