A Major Drawback of a Floating Exchange Rate Is The

question 262

Multiple Choice

A major drawback of a floating exchange rate is the:

• A) opportunity cost associated with the accumulation of foreign exchange reserves.
• B) uncertainty about the value of goods traded internationally.
• C) increased discipline on monetary policy.
• D) distorted incentives for the normal flow of imports and exports.

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Definitions:

Eastern European Nations

Countries located in the eastern part of the European continent, which may include nations like Poland, Hungary, Czech Republic, and others, depending on the context used.

Oceanic Nations

Refers to countries primarily located in the Pacific Ocean, which may share certain cultural, historical, and geopolitical characteristics or challenges.

Goal Sharing

The practice of communicating and aligning individual goals with those of a group or team to enhance cooperation and achieve mutual objectives.

Authority Ranking

A type of social hierarchy where individuals are ranked according to power or status, with higher-ranking individuals having authority over those lower in the hierarchy.