Under Purely Flexible Exchange Rates

question 14

Multiple Choice

Under purely flexible exchange rates,

• A) there is no intervention by the domestic fiscal or monetary authorities to specifically target the nominal exchange rate.
• B) there is only occasional intervention by the domestic fiscal or monetary authorities to specifically target the nominal exchange rate.
• C) the domestic fiscal and monetary authorities retain considerable flexibility to prevent short-run variability in the nominal exchange rate.
• D) the domestic fiscal and monetary authorities retain considerable flexibility to prevent long-run variability in the nominal exchange rate.

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