One Advantage of Adopting a Fixed Exchange Rate Is That

question 145

Multiple Choice

One advantage of adopting a fixed exchange rate is that:

• A)it makes business planning easier.
• B)interest cost fluctuations on foreign loans can be avoided.
• C)inflation can be avoided.
• D)the country can avoid current account surpluses.

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Definitions:

Price Elasticity

The measure of how much the quantity demanded of a good or service changes in response to a change in its price.

Demand

Pertains to the amount of a good or service that buyers are prepared and capable of buying at different price levels over a specified time frame.

Price Discrimination

The strategy of selling the same product at different prices to different customers, based on willingness to pay, without corresponding cost differences.

Price Discrimination Strategy

A pricing strategy where a company sells the same product to different buyers at different prices, based on what the seller believes each customer is willing to pay.