A Stable Exchange Rate Is Desirable Because

question 46

Multiple Choice

A stable exchange rate is desirable because:

• A)it leads to economic stability.
• B)it allows individuals and firms to make plans over time.
• C)it leads to higher growth rates in the long run.
• D)it leads to large transfers from one group to the other.
• E)None of the above is correct.

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Definitions:

Equilibrium Quantity

The quantity of goods or services that is supplied and demanded at the equilibrium price, where market supply and demand balance each other.

External Benefits

Positive effects experienced by individuals or groups who did not directly participate in the actions that produced those benefits.

Resources

Assets, materials, and inputs needed for the production of goods and services, including natural, human, and capital resources.

Production

The process of creating goods and services from various inputs like labor, technology, and raw materials.