Research in the Performance of Developing Nations with Exchange Rate

question 70

Multiple Choice

Research in the performance of developing nations with exchange rate pegs has shown that:

• A) fixed exchange rates are 100% effective in curbing inflation and preventing hyperinflation.
• B) fixed exchange rates are 100% ineffective in curbing inflation and preventing hyperinflation.
• C) floating exchange rates are more effective in curbing inflation and preventing hyperinflation.
• D) fixed exchange rates are neither necessary nor sufficient to curb inflation and prevent hyperinflation.

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Definitions:

Pacific Ocean

The largest and deepest of the world's oceanic divisions, extending from the Arctic in the north to the Southern Ocean in the south.

Spanish Settlement

A community or colony established by Spaniards in foreign territories during their period of exploration and colonization.

Jamestown

The first permanent English settlement in North America, established in Virginia in 1607.

St. Augustine

A historic city in Florida known for its Spanish colonial architecture as well as being an influential figure in Christian theology.