Which of the Following Is Not a Criticism of Flexible

question 80

Multiple Choice

Which of the following is not a criticism of flexible exchange rates?

• A)All of the following.
• B)They are volatile, which increases risks for importers and exporters.
• C)They could affect employment and increase demand for trade restrictions.
• D)They do not allow for discretionary monetary policy.
• E)They allow central banks to follow expansionary monetary policies.

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Definitions:

Real Wages

Wages or salaries adjusted for inflation, reflecting the true purchasing power of income.

Potential Output

The economy’s maximum sustainable output, given the supply of resources, technology, and rules of the game; the output level when there are no surprises about the price level.

Natural Rate

The natural rate refers to the long-term unemployment rate that an economy experiences under normal conditions, unaffected by short-term cyclical fluctuations.

Full-Employment

A scenario where an economy utilizes all accessible labor resources in the most optimized manner.