Critics of Fixed Exchange Rates Argue That Fixed Rates

question 117

Multiple Choice

Critics of fixed exchange rates argue that fixed rates:

• A)​reduce uncertainty in international trade.
• B)​result in currency shortages just as wage and price controls lead to shortages in markets for goods and services.
• C)​make nations less constrained in carrying out in internal macroeconomic policies.
• D)​lead to constant, day-to-day changes in the exchange values of currencies.

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Definitions:

Capital Budgeting

The process by which a business evaluates and plans for significant investments in projects or long-term assets.

Straight-Line Depreciation

A technique of spreading the expense of an asset evenly across its lifespan to calculate depreciation.

Income Tax Expense

The amount of money a company is required to pay to the government based on its net income, according to the applicable income tax rates.

Capital Budgeting

The process of planning and managing a company's long-term investments in projects and assets.