All of the Following Are True Concerning the Flexible Exchange

question 171

Multiple Choice

All of the following are true concerning the flexible exchange rate system except one.Which is the exception?

• A)It is the same as a floating exchange rate system.
• B)It is a system in which supply and demand determine the exchange rate.
• C)Government officials have little direct role in the foreign exchange market.
• D)Exchange rates may fluctuate considerably from time to time.
• E)Exchange rates are fixed by the central banks of the various countries.

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Definitions:

Money Supply

At any specified time, the overall financial assets available in an economy, covering cash, coins, and the balances in checking and savings accounts.

Output

The amount of goods or services produced by a company, industry, or economy within a specific period.

Long-run Phillips Curve

An economic concept illustrating that in the long-term, there is no trade-off between inflation and unemployment, suggesting that the natural rate of unemployment is unaffected by inflation.

Money Supply Growth Rate

The rate at which the total amount of money available in an economy increases over a specific period.