Proponents of Fixed Exchange Rates, Who Argue That These Rates

question 123

Multiple Choice

Proponents of fixed exchange rates, who argue that these rates eliminate uncertainty and therefore promote international trade, sometimes fail to recognize that:

• A)fixed exchange rates may not remain fixed forever.
• B)fixed exchange rates are more volatile than flexible exchange rates.
• C)exchange rates do not matter to businesses, so the uncertainty has no impact.
• D)international trade is bad for the economy and should not be promoted.

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Definitions:

Natural Monopoly

A market situation where due to high fixed costs or unique production processes, one provider can supply a product or service more efficiently than multiple competitors.

Average Total Cost

The total cost of production divided by the total output or quantity of goods produced.

Downward-sloping Market Demand Curve

This concept depicts the inverse relationship between price and quantity demanded in a market, indicating that higher prices typically lead to lower quantities demanded, and vice versa.

Marginal Revenue

The additional income received from selling one more unit of a good or service; it's a critical concept in business and economics for understanding how to maximize profit.