One Limitation of Maintaining a Fixed Exchange Rate System Is

question 371

Multiple Choice

One limitation of maintaining a fixed exchange rate system is that:

• A) it subjects the country's exchange rate to wide fluctuations in the foreign exchange market.
• B) it provides an incentive for the country to change its inflation policy frequently.
• C) the country may not be able to use monetary policy to achieve other goals, such as full employment.
• D) it leads to wide fluctuations in the growth rate.

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Definitions:

Odorless Gases

Gases that lack a detectable smell, and can be natural or manufactured, with some posing health risks if inhaled in sufficient concentrations.

CFCs

Chlorofluorocarbons, a class of chemicals used in refrigerants and aerosols, which have been found to deplete the ozone layer.

Desertification

A progression where arable land turns into barren desert areas, usually caused by periods of dryness, the removal of trees, or improper agricultural methods.

Topsoil

Uppermost layer of soil; contains the most organic matter and plant nutrients.