If a Country Wants to Keep Its Exchange Rate Fixed

question 228

Multiple Choice

If a country wants to keep its exchange rate fixed, it must

• A) allow its currency value to vary with market supply and demand in foreign exchange markets.
• B) be a member of the IMF.
• C) vary the amount of its national currency supplied at any given exchange rate in foreign exchange markets when necessary.
• D) eliminate its foreign exchange reserves.

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Definitions:

Primacy Effect

The phenomenon that the first items presented in a series are more likely to be remembered than items in the middle.

Moderate Alcohol Consumption

The intake of alcoholic beverages within limits considered to have minimal health risk, often defined differently across cultures and guidelines.

Fear Appeals

A persuasive message that attempts to arouse fear in order to influence attitudes, intentions, and behaviors towards avoiding harmful activities or situations.

Common Knowledge

Information that is known by many people and can be considered widely understood or recognized.