Why Might a Country Choose to Maintain a Fixed Exchange

question 72

Multiple Choice

Why might a country choose to maintain a fixed exchange rate?

• A)to allow it to print money
• B)to reduce tariffs on its exports
• C)to discourage direct foreign investment
• D)to help it maintain low and stable inflation
• E)None of the above is correct.

---

Definitions:

Felsic

Refers to igneous rocks that are rich in lighter elements like silicon, oxygen, aluminum, sodium, and potassium.

Pyroclastic Flow

A swiftly flowing stream of heated gas and volcanic substances that descends a volcano's slope when there's a violent eruption.

Fluid Lava

Molten rock material expelled by a volcano during an eruption, characterized by its low viscosity which allows it to flow easily.

Eruption Column

A tall, dense column of ash, gas, and volcanic debris ejected into the atmosphere during an explosive volcanic eruption.