Fixed Rate Relationships Among Currencies Could Not Stay Fixed,according to Obstfeld

question 35

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:

Stress Reaction

The physical, mental, and emotional response to perceived threats or challenges.

Lymphocyte

A type of white blood cell that plays an essential role in the immune system, protecting the body from infection and disease.

Macrophage

A type of white blood cell that engulfs and digests cellular debris, foreign substances, microbes, and cancer cells in a process called phagocytosis.

Life-Event Stressors

Significant life events, whether positive or negative, that can cause stress and require significant adjustment from the individual experiencing them.