In an Economy with a Fixed Exchange Rate, When the Market

question 132

Multiple Choice

In an economy with a fixed exchange rate, when the market forces try to change the exchange rate, the government:

• A) must buy or sell its currency using its own reserve to bring equilibrium in the market to where it has "fixed" it.
• B) declares it can't change, and holds it constant.
• C) often has to deal with an unhappy domestic population who are constantly dealing with shortages or surpluses of their currency.
• D) None of these statements is true.

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Definitions:

Mobbing

A form of bullying in which a person is harassed or attacked by a group, either physically or psychologically.

Bullying

Aggressive behavior that involves unwanted, negative actions towards another individual, often repeated over time.

Rage

Intense, uncontrollable anger often expressed in a violent manner.

Harm Model

A conceptual framework used to evaluate or predict the negative impacts of a policy, action, or system.