A Small Economy Country Whose GDP Is Heavily Dependent on Trade

question 21

Multiple Choice

A small economy country whose GDP is heavily dependent on trade with the United States could use a(n) ________ exchange rate regime to minimize the risk to their economy that could arise due to unfavorable changes in the exchange rate.

• A) pegged exchange rate with the United States
• B) pegged exchange rate with the Euro
• C) independent floating
• D) managed float

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Definitions:

Folkways

Norms for routine or casual interaction; these are the everyday practices and customs that guide social behavior in a society.

Laws

Established rules of conduct enforced by governmental authority to maintain order and protect rights and properties.

Communicated

The process by which information is exchanged or conveyed between individuals through a common system of symbols, signs, or behavior.

Language

A system of communication used by a particular community or country, involving the use of words in a structured and conventional way.