The Figure Given Below Depicts the Foreign Exchange Market for British

question 121

Multiple Choice

The figure given below depicts the foreign exchange market for British pounds traded for U.S. dollars.Figure 22.2

-Under a fixed exchange-rate system, in order to maintain the exchange rate:

• A)governments must adopt a laissez-faire economic policy.
• B)all trading partners must enjoy the same level of economic growth.
• C)currencies must be inconvertible.
• D)the imports of one country must equal the exports of its trading partner.
• E)governments must intervene in the foreign exchange market.

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Definitions:

Short Run

In economics, a timeframe where at least one factor of production is considered fixed, limiting the firm's capacity to adjust fully to market changes.

Price Level

The average of current prices across the entire spectrum of goods and services produced in the economy.

Price Level

A measure of the average prices of goods and services in the economy.

Graph

A visual representation of data, relationships, or trends through various types of charts such as line, bar, or pie charts.