Fixed-Rate Relationships Among Currencies Could Not Stay Fixed, According to Obstfeld

question 23

Multiple Choice

Fixed-rate relationships among currencies could not stay fixed, according to Obstfeld and Rogoff, because:

• A) the volume of global transactions started to exceed most countries' foreign exchange reserves, so governments couldn't intervene to sustain the value of their currency.
• B) the complexity of international trade demanded return of the gold standard.
• C) Walmart and other leading firms argued successfully at the Federal Reserve that fixed rates were too costly to maintain.
• D) the EU had decided to float the euro.

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Definitions:

Time-Driven Activity-Based Costing

A cost accounting method that allocates indirect costs to products and services based on the time required for activities.

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An assessment to determine the total cost to serve a customer, including acquisition, fulfillment, and support costs.

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An accounting method that assigns costs to products based on the actual activities and time required to manufacture a product.