If There Is a Greater Degree of Economic Similarity Between

question 114

Multiple Choice

If there is a greater degree of economic similarity between the home nation and the base currency nation, the economic stabilization benefit of pegged exchange rates:

• A) gets smaller.
• B) becomes more equal.
• C) gets larger.
• D) disappears.

---

Definitions:

Cotton Cultivation

The agricultural process of growing cotton plants for their fibers, which are harvested and processed to make textile products.

Second Bank

A federal institution that served as the United States' central bank from 1816 to 1836, succeeding the First Bank of the United States.

Nicholas Biddle

A prominent early 19th-century American financier and President of the Second Bank of the United States, known for his battles with President Andrew Jackson over the bank's renewal.

Paul Volcker

An American economist who served as the Chairman of the Federal Reserve from 1979 to 1987, known for his measures to combat inflation by controlling money supply.