In Order to Be Drawn Correctly the Gap Between ATC

question 61

Multiple Choice

In order to be drawn correctly the gap between ATC and AVC is

• A)Constant.
• B)Diminishing until they cross at which point they diverge.
• C)Diminishing until they cross at which point they quickly reconverge.
• D)Shrinking but they never cross.

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Definitions:

Managed Floating

An exchange rate system where a country's currency value is allowed to fluctuate in response to foreign-exchange market mechanisms, but the central bank can intervene to prevent extreme fluctuations.

Bretton Woods System

A monetary management system established post-World War II, which set up rules for commercial and financial relations among major industrial states.

Pegged Exchange Rates

A fixed exchange rate system where a country's currency value is fixed or pegged to another currency, a basket of currencies, or another measure of value.