A Flexible Exchange Rate Is an Exchange Rate Whose Value

question 70

Multiple Choice

A flexible exchange rate is an exchange rate whose value:

• A) is determined by the law of one price.
• B) varies according to the supply and demand for the currency in the foreign exchange market.
• C) is established annually by the International Monetary Fund.
• D) reflects the comparative advantage of the home country versus other foreign countries.

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Definitions:

Inflation

The rate at which the general level of prices for goods and services is rising, eroding purchasing power.

Environmental Scanning

is a process that systematically surveys and interprets relevant data to identify external opportunities and threats that could influence future decisions and strategies.

Direct Competition

Companies or products that offer the same or very similar goods or services to the same customer or market base.

Economic Force

An element that influences the direction of an economy, potentially affecting business operations and profitability.