One Argument for a Fixed Exchange Rate System Is That

question 65

Multiple Choice

One argument for a fixed exchange rate system is that

• A) governments can contract their money supply without worrying about the need to maintain parity.
• B) trade balance adjustments do not require the intervention of the International Monetary Fund.
• C) it ensures that governments do not expand the monetary supply too rapidly, thus causing high price inflation.
• D) speculations in exchange rates boost exports and reduce imports.
• E) each country should be allowed to choose its own inflation rate.

---

Definitions:

Aggressive Nature

A predisposition or behavior characterized by readiness to confront or attack.

Psychosexual Stages

A Freudian theory that proposes child development progresses through a series of stages oriented around the erogenous zones.

Personality Development

The growth and development of the organized pattern of behaviors and attitudes that makes a person distinctive over their lifetime.

Fixated

An obsessive or focused attention on a particular object, task, or idea, often to an excessive or unhealthy degree.