Which of the Following Conditions Would Make Fixed Exchange Rates

question 3

Multiple Choice

Which of the following conditions would make fixed exchange rates relatively unattractive for a nation?

• A) high levels of foreign exchange reserves
• B) relatively little involvement in global capital markets
• C) immobility of labor and sticky wages
• D) weak central bank credibility
• E) heavy reliance on trade with the country whose currency will be the peg

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Definitions:

Hazardous Chemical

A chemical substance that poses a potential risk to health, safety, or the environment.

Willingness To Pay

The highest price a person is willing to pay for a product or service, indicative of its perceived worth to them.

Public Park

An area of natural, semi-natural, or planted space set aside for human enjoyment and recreation or for the protection of wildlife or natural habitats.

Not Excludable

A characteristic of public goods where it is not possible to prevent people from using the good or service, regardless of whether they have paid for it.