In a Freely Fluctuating Exchange-Rate System,if the Inflation in Country

question 59

Multiple Choice

In a freely fluctuating exchange-rate system,if the inflation in Country A rises in relation to inflation in Country B,what will the currency in country A do in relation to the currency in country B?

• A) It will strengthen.
• B) It will weaken.
• C) It will remain the same.
• D) It will lead to deflation.

---

Definitions:

Producer Surplus

The difference between what producers are willing to accept for a good or service and the actual price they receive.

Price Discrimination

Price discrimination refers to the strategy of selling the same product at different prices to different groups of customers, based on their willingness to pay.

Sherman Antitrust Act

A landmark federal statute in the United States passed in 1890 which prohibits certain business activities that federal government regulators deem to be anti-competitive.

Restraints of Trade

Legal or economic restrictions placed on the free exchange or movement of goods, services, or labor, often to maintain fair competition or prevent monopolistic practices.