Which of the Following Is a Characteristic of the Floating

question 54

Multiple Choice

Which of the following is a characteristic of the floating exchange rate regime?

• A)It allows for automatic trade balance adjustments.
• B)The use of monetary policy by the government is restricted.
• C)It allows for greater monetary discipline.
• D)It limits the destabilizing effects of exchange rate speculation.
• E)It eliminates volatility and uncertainty associated with exchange rates.

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Definitions:

Output Decreases

A reduction in the amount of goods or services produced by a company or economy over a specific period.

Total Variable Cost

The overall expenses that change in proportion to the level of production or business activity.

Average Fixed Cost

The total fixed costs of production divided by the quantity of output produced, showing the cost of fixed resources per unit of output.

Total Fixed Costs

Expenses incurred by a business that do not vary with the level of production or sales, including lease payments and salaries of permanent staff.