Two Reasons for an Industrialized Country to Adopt an Exchange-Rate

question 68

Multiple Choice

Two reasons for an industrialized country to adopt an exchange-rate targeting regime are if the country ________ conduct successful monetary policy on its own,and if the country wants to ________ integration of the domestic economy with its neighbors.

• A)cannot;encourage
• B)cannot;discourage
• C)can;encourage
• D)can;discourage

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Definitions:

Marginal Products

The extra output that is produced by using one more unit of a particular input, holding all other inputs constant.

Separating Equilibrium

Separating equilibrium occurs in a game or market when different types of participants choose distinctly different strategies or products, revealing their type.

Pooling Equilibrium

A situation in a market where all agents, regardless of their type or quality, provide the same signal, making it impossible to distinguish between them based on that signal alone.

Microeconomics

The branch of economics that studies individual agents and markets, decision-making processes, and the outcomes of interactions.