Under a System of Flexible Exchange Rates,a Nation Which Tightens

question 19

Multiple Choice

Under a system of flexible exchange rates,a nation which tightens its monetary policy would be likely to experience

• A)a loss in international reserves.
• B)a fall in the value of its currency.
• C)short-term capital outflows.
• D)an appreciation of its currency.
• E)a surplus in its current account.

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Definitions:

Self-Serving Bias

The common human tendency to attribute one's successes to personal factors while attributing failures to factors beyond one's control.

Fundamental Attribution Error

A cognitive bias where people tend to attribute others' actions to their character or disposition while underestimating situational factors.

Self-Fulfilling Prophecy

A prediction that directly or indirectly causes itself to become true due to the feedback between belief and behavior.

Projection

A defense mechanism in psychology where individuals attribute their own unacceptable thoughts, feelings, or motives to another person.