Which of the Following Statements Is True About the Various

question 101

Multiple Choice

Which of the following statements is true about the various exchange rate systems?

• A)In a fixed exchange rate system,the value of a currency is adjusted according to the day to day market forces.
• B)In a clean float,the central bank of a country will intervene in the foreign exchange market to try to maintain the value of its currency.
• C)After the collapse of the Bretton Woods system of floating exchange rates in 1973,the world has operated with a fixed exchange rate system.
• D)Under the Bretton Woods system,currency devaluations over 10 percent were allowed only with the approval of the IMF.
• E)In dirty float,the exchange rate between a currency and other currencies is relatively fixed against a reference currency exchange rate.

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Definitions:

Marginal Benefit

The boost in pleasure or utility a person gets from purchasing one more unit of a product or service.

Output

The aggregate output of products or services generated by an enterprise, sector, or economic system over a defined time frame.

Positive Externality

A benefit obtained without compensation by third parties from the production or consumption of sellers or buyers. Example: A beekeeper benefits when a neighboring farmer plants clover. Also known as an external benefit or a spillover benefit.

Spillover Benefit

A positive effect experienced by bystanders or other parties not directly involved in the production or consumption of a good or service.