Under a Fixed-Rate System,a Country That Followed Policies Leading to a Lower

question 15

Multiple Choice

Under a fixed-rate system,a country that followed policies leading to a lower inflation rate than that experienced by its trading partners would

• A)come under pressure to expand its money supply
• B)restrict the growth of its money supply
• C)experience a balance-of-payments deficit
• D)be forced to buy its currency in the foreign exchange market

---

Definitions:

Legal Obligation

A duty enforced by law, requiring an individual or organization to act or refrain from acting in a specific manner.

Statutory Provision

A specific piece of legislation enacted by a governing body that establishes legal requirements or regulations.

Common Law

A system of law based on precedent and customs, originating in England and forming the basis of the legal system in the United States and other countries.

Promise Under Seal

A formal commitment or contract that is legally binding because it is physically sealed, representing a solemn promise.