Symmetric Shocks Pose Fewer Problems for Nations Linked by Fixed

question 179

Multiple Choice

Symmetric shocks pose fewer problems for nations linked by fixed exchange rates to a base currency. In general:

• A) because there are common problems, the economic policy taken by the base currency nation is beneficial for both nations.
• B) it gives the nation maintaining the peg more autonomy to deal with financial crises.
• C) the base currency nation can just do nothing, and the issue will resolve itself.
• D) when there are symmetric shocks, the home nation unlinks its exchange rate from the base currency nation.

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Definitions:

Stimulus Discrimination

The ability to distinguish between different stimuli, even if they are similar, based on learned responses.

Stimulus Generalization

The tendency for the conditioned response to be elicited by stimuli that are similar to the conditioned stimulus.

Spontaneous Recovery

The return of a conditioned response that had previously disappeared, following a break from being exposed to the associated stimulus.

Backward Conditioning

A form of conditioning in which the unconditioned stimulus is presented before the conditioned stimulus, making it less effective or ineffective.