If a Country Moves from Fixed to Flexible Exchange Rates

question 15

Multiple Choice

If a country moves from fixed to flexible exchange rates, its macroeconomic policy

• A) is no longer restricted.
• B) is restricted, as it can only use fiscal policy to achieve its economic goals.
• C) is restricted, as it can only use monetary policy to achieve its economic goals.
• D) must follow policy directives from the IMF.

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Definitions:

Paid-In Capital

The total amount of money shareholders have invested in a company in exchange for equity, including shares at par value and additional paid-in capital.

Treasury Stock

Treasury stock refers to shares that were issued and subsequently reacquired by the issuing company, reducing the amount of outstanding stock on the open market.

Reissuance

The process of re-releasing previously issued shares back into the market, often after they've been bought back by the company.

Treasury Stock

Shares that were once issued and outstanding but were later bought back by the company, reducing the amount of outstanding stock on the open market.