Which of the Following Is a Drawback of the Currency

question 31

Multiple Choice

Which of the following is a drawback of the currency board system?

• A)The ease with which governments can set and manipulate interest rates acts as a limitation.
• B)Higher domestic inflation rates compared to the inflation rate in the country to which the currency is pegged can make the currency uncompetitive.
• C)The currency board can issue additional domestic notes and coins even when there are no foreign exchange reserves to back it.
• D)The system is a true fixed exchange rate regime, because the domestic currency is fixed against other currencies.
• E)The system lacks commitment to convert domestic currency on demand into another currency.

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Definitions:

Wealth Flows

The movement of financial resources and assets between individuals, families, or countries, impacting economic stability and development.

International Labour Organization

A United Nations agency founded in 1919 that sets international labor standards and promotes rights at work, encouraging decent employment opportunities and enhancing social protection.

Workers Worldwide

Refers to the global workforce, encompassing individuals in various countries engaged in different forms of employment, highlighting the diversity and similarity of labor issues worldwide.

Earned Less

A phrase referring to receiving lower income or wages in comparison to others or to a previous period of time.