A Major Economic

question 73

Multiple Choice

A major economic

• A)benefit of fixed exchange rates is that they simplify economic calculations and provide a more predictable basis for decisions that involve international transactions than do floating rates.
• B)benefit of floating exchange rates it that they simplify economic calculations and provide a more predictable basis for decisions that involve international transactions than do fixed rates.
• C)cost of fixed exchange rates it that they simplify economic calculations and provide a more predictable basis for decisions that involve international transactions than do currency board rates.
• D)benefit of flexible exchange rates it that they simplify economic calculations and provide a more predictable basis for decisions that involve international transactions than do crawling peg rates.
• E)benefit of fixed exchange rates is that the value of goods will remain constant across a large region of consumers.

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Definitions:

System Justification Theory

A theory suggesting that people have a psychological tendency to defend, uphold, and justify the status quo, even at the expense of personal or group interest.

Illegitimate System

A system or structure of authority that is not recognized as lawful or officially justified.

Unstable System

A system that lacks equilibrium or consistency, characterized by frequent changes or unpredictability.

Isolated

Being separated from others or feeling alone and disconnected from a social or physical environment.