If a Country Tries to Maintain a Flexible Exchange Rate

question 28

Multiple Choice

If a country tries to maintain a flexible exchange rate it must be willing to

• A)sell gold and hard currency to weaken its currency, if needed.
• B)print and sell its own currency to weaken it, if needed.
• C)print and sell its own currency to strengthen it, if needed.
• D)accept a large fluctuation in the exchange rate.

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Definitions:

Heuristic

A mental shortcut that allows people to solve problems and make judgments quickly and efficiently.

Quasi-reflective Thinker

An individual at a stage of cognitive development where they recognize that some knowledge is uncertain, yet they struggle to integrate this uncertainty into their judgments.

Logical Consistency

The quality of being free from contradictions and logically coherent in argument or theory.

Purely Subjective

Based entirely on personal feelings, tastes, or opinions, without any external objective reference or measurement.