Advocates of the Fixed Exchange Rate System Argue All of the Following

question 145

Multiple Choice

Advocates of the fixed exchange rate system argue all of the following except one.Which is the exception?

• A)Fixed exchange rates are not vulnerable to the actions of speculators.
• B)Fixed exchange rates introduced greater future certainty into trading which will increase the volume of international trade.
• C)Fixed exchange rates are able to adjust rapidly so as to attract foreign investment.
• D)With fixed exchange rates,export and import industries do not suffer severe and unpredictable fluctuations in business.
• E)The certainty that comes from fixed exchange rates increases the volume of international investment.

---

Definitions:

Trade-Offs

Decisions made that involve a sacrifice of one thing to obtain another, often used in discussions of economic and personal choices.

Opportunity Cost

This represents the value of the best alternative foregone when a decision to pursue a certain action is made.

Given Budget

A specified sum of money allocated for a particular purpose, often within a fixed time period.

Price

The amount of money or its equivalent paid or charged for a product or service, or the sum of values that consumers exchange for the benefits of having or using the product or service.