Which of the Following Reasons Is a Weakness of the Explanation

question 39

Multiple Choice

Which of the following reasons is a weakness of the explanation of exchange-rate policy changes according to the sectoral model?

• A) The sectoral approach may underestimate the importance that export-oriented firms attach to exchange rate stability.
• B) The sectoral approach may overestimate the importance that the traded goods sector attaches to a strong currency.
• C) The sectoral model tells us little about exchange-rate policy outcomes.
• D) The sectoral approach may overestimate the importance that export-oriented firms attach to monetary-policy autonomy.
• E) The sectoral approach may underestimate the importance that the traded goods sector attaches to a weak currency.

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Definitions:

Mammals

Warm-blooded vertebrates characterized by the presence of mammary glands, which in females produce milk for feeding their young.

Sold

The completed sale of goods or services from one party to another, transferring ownership.

Probability

A mathematical measure indicating the likelihood or chance of a specific event occurring, ranging from 0 (impossible) to 1 (certain).

Quarter

A period of three months used in financial and business sectors for reporting, forecasting, and dividing the fiscal year.