Which of the Following Is a Characteristic of the Floating

question 54

Multiple Choice

Which of the following is a characteristic of the floating exchange rate regime?

• A)It allows for automatic trade balance adjustments.
• B)The use of monetary policy by the government is restricted.
• C)It allows for greater monetary discipline.
• D)It limits the destabilizing effects of exchange rate speculation.
• E)It eliminates volatility and uncertainty associated with exchange rates.

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Definitions:

Groupthink

A situation in which the pursuit of agreement or uniformity within a group leads to choices that are unreasonable or not effective.

Isolated Groups

Communities or social groups that have limited or no contact with other groups, leading to distinct cultural or social development.

Noncohesive Groups

Collections of individuals lacking unity or common bonds, often resulting in decreased group effectiveness and cooperation.

Reducing Groupthink

Strategies and measures aimed at preventing the occurrence of groupthink, a phenomenon where the desire for harmony in a decision-making group overrides a realistic appraisal of alternatives.