If a Government Using Fixed Exchange Rates Chooses to Increase

question 98

Multiple Choice

If a government using fixed exchange rates chooses to increase the rate,the currency:

• A)is revalued.
• B)is devalued.
• C)is upvalued.
• D)appreciates.

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Definitions:

Inelastic Demand

A market condition where the demand for a good or service is relatively unresponsive to changes in its price.

Substitute Resources

Alternative resources that can be used in place of another to satisfy consumer demand or production needs, often affecting market competition and prices.

Elastic Demand

A market situation where the quantity demanded of a good or service changes significantly as its price changes.

Short Run

A period during which at least one of a firm's inputs is fixed, limiting its ability to adjust production levels.