A Country with a Fixed Exchange Rate Regime

question 120

Multiple Choice

A country with a fixed exchange rate regime:

• A)tends to increase uncertainty regarding the value of its currency.
• B)allows countries to use both fiscal and monetary policies to stabilize their economy.
• C)reduces a country's bias toward inflationary policies.
• D)reduces the amount of foreign currency a country must hold.

---

Definitions:

Travel

The act of moving from one place to another, which can be for various purposes such as leisure, business, or exploration.

Marginal Cost

Marginal cost is the cost increase for producing one more unit of a good or service, adding to the total cost.

Marginal Benefit

The additional benefit received from the consumption of one more unit of a good or service.

Satisfaction

The feeling of pleasure or fulfillment that comes from achieving or exceeding expectations, often related to goods or services.