If a Government Is Unwilling to Accept Occasional Deflation and Inflation

question 34

Multiple Choice

If a government is unwilling to accept occasional deflation and inflation caused by balance of payments adjustments,

• A) it cannot maintain a fixed exchange rate system.
• B) it must maintain a fixed exchange system.
• C) it can both stabilize exchange rates and domestic prices at the same time.
• D) it cannot trade with other countries.
• E) it cannot maintain a floating exchange system.

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Definitions:

Inspiratory Stridor

A high-pitched sound heard during inhalation, indicating an obstruction in the airway.

Complete Obstruction

A full blockage that prevents passage or flow through an organ or pathway in the body.

Decongestant Nose Drops

Medication drops used in the nose to relieve congestion by narrowing blood vessels and reducing swelling in the nasal passage.

Upper Respiratory Tract Infection

An infectious condition affecting the nose, throat, and airways, common examples include the common cold and influenza.