Which of the Following Statements Is True About the Current

question 119

Multiple Choice

Which of the following statements is true about the current monetary system?

• A)Use of instruments such as the forward market and swaps has decreased since the breakdown of the Bretton Woods system.
• B)The present monetary system lacks the volatile movements in exchange rates that existed in a fixed exchange rate system.
• C)The current foreign exchange market works exactly as depicted in the purchasing power parity theory.
• D)Instruments such as the forward market and swaps increase the foreign exchange risk a company faces.
• E)A combination of government intervention and speculative activity drives the current foreign exchange market.

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Definitions:

Barrier to Entry

Obstacles that prevent or hinder new competitors from easily entering an industry or area of business.

Exclusive Rights

Legal rights granted to individuals or firms, limiting others from reproducing, publishing, or selling particular goods or services.

Market Power

The ability of a company or entity to influence the price and production levels in a market.

Monopolists

Entities with exclusive control over the supply of a particular good or service, setting prices and output levels.