Of the Following Exchange Rate Arrangements,in Which Does the Exchange

question 27

Multiple Choice

Of the following exchange rate arrangements,in which does the exchange rate fluctuate around a fixed central target rate while allowing a moderate amount of fluctuation?

• A)Independently floating
• B)Currency Board
• C)Horizontal Bands
• D)Fixed peg

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Definitions:

Pure Competition

A market structure characterized by a large number of small firms, a homogeneous product, and free entry and exit which leads to price taking behavior.

Barriers To Entry

Elements that obstruct or impede the ability of businesses to penetrate a particular market or sector.

Elasticity Coefficient

The elasticity coefficient measures how much the quantity demanded or supplied of a good responds to a change in one of its determinants, such as price, income, or the price of related goods.

Perfectly Elastic

Describes a market situation where demand or supply can change infinitely with even the slightest change in price.