Which of the Following Is NOT an Advantage to Exchange-Rate

question 11

Multiple Choice

Which of the following is NOT an advantage to exchange-rate targeting?

• A)It provides a strong nominal anchor to keep inflation under control.
• B)It provides an automatic rule for policy to help avoid the time-inconsistency problem.
• C)It is simple and clear so that the public can easily understand it.
• D)It increases the accountability of policymakers.

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Definitions:

Perfectly Competitive

A market structure characterized by many buyers and sellers, all of whom are price takers with the product being homogeneous.

Sunk Costs

Expenses that have already been incurred and cannot be recovered, which should not influence future business decisions.

Dairy Farmer

A dairy farmer is an individual engaged in the management and care of cows for the production of milk and other dairy products.

Accounting Profits

The difference between total revenue and explicit costs of a business, calculated according to standard accounting practices.