Proponents of the Flexible Exchange Rate System Argue That Under

question 21

Multiple Choice

Proponents of the flexible exchange rate system argue that under a fixed exchange rate system,

• A) there is too great a chance that the exchange rate will diverge from the equilibrium exchange rate.
• B) nations that experience persistent trade deficits might be tempted to impose trade barriers.
• C) nations might sacrifice their domestic economic policy goals for the sake of maintaining the exchange rate.
• D) b and c
• E) a,b,and c

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Definitions:

Zeigarnik Effect

The Zeigarnik effect is a psychological phenomenon which describes the tendency to remember uncompleted tasks more easily than completed tasks.

Von Restorff Effect

A psychological phenomenon where an item that stands out is more likely to be remembered than other items.

Intrinsic Motivations

The drive to engage in activities for their own sake, out of interest or enjoyment, rather than for external rewards or pressures.

Extrinsic Motivations

Encouragement stemming from external stimuli like cash rewards, public acclaim, educational scores, and accolades.