A Fixed Exchange Rate Regime Imposes Discipline in Two Ways

question 3

Multiple Choice

A fixed exchange rate regime imposes discipline in two ways: (1) the need to maintain a fixed exchange rate puts a brake on competitive devaluations and brings stability to the world trade environment and (2) a fixed exchange rate regime imposes what?

• A) social discipline on countries, thereby increasing the standard of living
• B) economic discipline on countries, thereby increasing gross national product
• C) political discipline on countries, thereby curtailing global opportunism
• D) monetary discipline on countries, thereby curtailing price inflation
• E) currency stability, thereby curtailing trade wars

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Definitions:

Little Albert

The subject of a famous psychology experiment by John B. Watson, demonstrating how emotional responses could be conditioned in humans.

Classical Conditioning

A learning process that pairs a neutral stimulus with a stimulus that elicits a reflexive response until the neutral stimulus alone elicits that response.

Observational Learning

A form of social learning where behaviors are learned by watching and imitating the actions of others.

Conditioned Taste-Aversion

Learning to avoid a food or drink because it has been associated with an illness or negative experience, even after only one exposure.