Which of the Following Is Not an Advantage to a Country

question 93

Multiple Choice

Which of the following is not an advantage to a country of choosing to fix its exchange rate against a major currency,rather than choosing a floating exchange rate?

• A)Pegging allows the country more flexibility in conducting monetary policy.
• B)Pegging helps avoid inflation in imported goods caused by currency depreciation for countries with significant levels of imports.
• C)Pegging insures that interest payments stemming from foreign loans do not fluctuate with the value of the currency.
• D)Pegging reduces the uncertainty caused by currency fluctuations and thereby simplifies business planning.

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Definitions:

Body Image

An individual's perception and feelings about their own body and physical appearance.

Mental Picture

Visual image or representation formed in the mind that reflects what is perceived or thought by an individual.

Attractiveness

Refers to the quality of being visually pleasing or appealing to the senses.

Devaluation

The reduction in the value of a currency with respect to other monetary units, or a decrease in the worth or perception of value of something.