An Advantage to Exchange-Rate Targeting Is It Helps Keep Inflation

question 23

Multiple Choice

An advantage to exchange-rate targeting is it helps keep inflation under control by tying the inflation rate for ________ traded goods to what is found in the ________ country.

• A)domestically;anchor
• B)domestically;domestic
• C)internationally;anchor
• D)internationally;domestic

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Definitions:

Price Control

Government regulations that set the maximum or minimum prices for specific goods and services to control inflation or ensure affordability.

Binding

A condition, especially in legal or contractual contexts, that obliges entities to act according to the terms of an agreement or rule.

Labor Shortage

A situation in which employers believe there are insufficient qualified candidates to fill job vacancies, impacting the pace and cost of business operations.

Binding Minimum Wage

A government-set wage floor that is above the equilibrium level, leading to potential surpluses in the labor market, such as unemployment.