One Drawback of the Currency Board System Is

question 115

Multiple Choice

One drawback of the currency board system is

• A)the ease with which governments can set and manipulate interest rates acts as a limitation.
• B)higher domestic inflation rates compared to the inflation rate in the country to which the currency is pegged can make the currency uncompetitive.
• C)the currency board can issue additional domestic notes and coins even when there are no foreign exchange reserves to back it.
• D)the system is a true fixed exchange rate regime,because the domestic currency is fixed against other currencies.
• E)the system lacks commitment to convert domestic currency on demand into another currency.

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Definitions:

Travelling Courts

Courts that move from place to place to hear and decide cases, typically found in regions where accessing a fixed court location is challenging.

Stare Decisis

The legal principle of determining points in litigation according to precedent, upholding previous judgments in similar cases to ensure consistency in law.

Civil Law System

A legal system originating in Europe, characterized by a comprehensive set of laws that are codified and serve as the primary source of law, with judges applying the codes rather than developing precedent.

Res Judicata

A legal principle that prevents a dispute that has been conclusively decided from being re-litigated between the same parties.