Advocates of Floating Rate Suggested It Is Favorable for Economies

question 10

Multiple Choice

Advocates of floating rate suggested it is favorable for economies for all of the following reasons EXCEPT

• A) it discourages attack from foreign exchange speculators because of the fact that exchange rate adjustment is immediate.
• B) it helps stabilize the shock effect on unemployment in case of economic changes such as a fall in export demand.
• C) it automatically matches the domestic inflation with ongoing foreign inflation.
• D) it gives every country the opportunity to guide its own monetary conditions at home.
• E) it brings the LR exchange rate to the level predicted by PPP without government policy decisions.

---

Definitions:

Demand Curve

A graphical representation of the relationship between the quantity of a good that consumers are willing and able to purchase and the price.

Substitutes

Goods or services that can replace each other in use, providing the consumer with a choice.

Body Panels

External components or parts of a vehicle's body structure, such as doors, hoods, and fenders, usually made from metal or composite materials.

Supply Curve

A graphical representation showing the relationship between the price of a good and the quantity of the good that suppliers are willing to produce and sell.