Suppose That Country a Pegs Its Currency to the Currency

question 173

Multiple Choice

Suppose that country A pegs its currency to the currency of country B. Which of the following will NOT be a benefit of this arrangement to country A?

• A) lower transactions costs for A to conduct international trade with country B
• B) increased capital flows between the two countries because of increased certainty of future exchange rates
• C) decreased migration between the two countries because of increased certainty of future exchange rates
• D) lower costs of economic transactions costs between the two countries, leading to welfare gains for country A

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Definitions:

Extrinsic Motivation

Motivation fueled by external incentives like financial gain, recognition, academic achievement, and commendation.

Intrinsic Motivation

A form of motivation driven by an internal reward system or personal satisfaction.

Authentic Desires

Genuine wants or aspirations that truly reflect an individual's personal values and interests, as opposed to those influenced by external societal pressures.

State of Flow

A psychological state where a person is fully immersed and engaged in an activity, experiencing a blend of focus, enjoyment, and fulfillment.