Advantages of a Fixed Exchange Rate Include

question 35

Multiple Choice

Advantages of a fixed exchange rate include

• A)reduction in exchange rate risk for businesses.
• B)reduction in transactions costs.
• C)reduction in trading frictions.
• D)all of the above

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Definitions:

Demand Curve

The Demand Curve is a graphical representation showing the relationship between the price of a good or service and the quantity demanded by consumers, typically downward sloping.

Supply Curve

A graph showing the relationship between the price of a good and the quantity of the good that suppliers are willing to produce and sell.

Y Axis

The vertical line in a graph or chart that typically represents the dependent variable.

Equilibrium Price

The point where the volume of goods being offered equals the volume of goods being sought in terms of price.