With Fixed Exchange Rates, the Imbalance Between Debits and Credits

question 78

Multiple Choice

With fixed exchange rates, the imbalance between debits and credits arising from shifts in currency demand and/or supply:

• A)​is accommodated by the market mechanism.
• B)​is accommodated by financial borrowings.
• C)​is accommodated by reserve movements.
• D)​either (b) or (c)

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Definitions:

Consumer Ignorance

A situation where consumers lack necessary information about products or services, which can affect their buying decisions and market outcomes.

Inelastic Demand

A situation where the demand for a product does not significantly change in response to changes in its price.

Product Differentiation

The process of distinguishing a product or service from others, to make it more attractive to a particular target market involves variations in quality, features, or design.

Incentives

Motivators or rewards designed to encourage specific actions or behaviors by individuals or organizations.