Why Might a Country Choose to Maintain a Fixed Exchange

question 91

Multiple Choice

Why might a country choose to maintain a fixed exchange rate?

• A) to allow it to print money
• B) to reduce tariffs on its exports
• C) to discourage direct foreign investment
• D) to help it maintain low and stable inflation
• E) to consumption smooth

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Definitions:

Volatile

Describing an asset or market with frequent, significant price changes over a short period.

Kondratieff

A theory proposing that Western capitalist economies have long-term (50 to 60 years) cycles of boom and bust, named after Russian economist Nikolai Kondratiev.

Macro Economy

Refers to the study of the overall aspects and workings of an economy, including inflation, unemployment, and economic growth.

Intervals

In statistics and mathematics, a range between two numbers where data points can lie, often used in the context of confidence intervals in research.