The Country of Ninook Wants to Adopt a Floating Exchange

question 29

Multiple Choice

The country of Ninook wants to adopt a floating exchange rate system.Which of the following is an argument that Ninook can use to make a case for a floating exchange rate system?

• A)Each country should be allowed to choose its own inflation rate.
• B)Speculation in exchange rates dampens the growth of international trade and investment.
• C)Unpredictability of exchange rate movements makes business planning difficult.
• D)Removal of the obligation to maintain exchange rate parity destroys a government's monetary control.
• E)Trade deficits can be determined by the balance between savings and investment in a country,not by the external value of its currency.

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Definitions:

Monthly Basis

A timeframe or calculation done once every month or for each month.

Round Answers

A mathematical procedure of adjusting the figure to the nearest desired value or precision, often in calculations or data presentations.

Finance Charge

The total cost of borrowing, including interest and other fees.

Previous Balance

The amount of money that was owed at the end of the previous billing period before any new charges were added.