A Nominal Anchor Is a Commitment to Keep Nominal Variables

question 39

Multiple Choice

A nominal anchor is a commitment to keep nominal variables within limits, often tied to an external value or price. When nations do not incorporate such discipline into their monetary policy, exchange rates are often:

• A) irrelevant to economic activity.
• B) extremely volatile, because traders consider monetary shocks to be permanent.
• C) less dependent on monetary variables.
• D) determined by political considerations rather than economic fundamentals.

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Definitions:

Frequency Detection

The ability of a system or organism to perceive and respond to specific frequencies of sound or electromagnetic waves.

Basilar Membrane

A key structure in the cochlea of the inner ear, it vibrates in response to sound, playing a critical role in the mechanical to neural transduction of sound.

Cochlea

A spiral-shaped cavity of the inner ear that plays a key role in converting sound waves into electrical signals for the brain to interpret as sound.

Ossicle

Small bones in the middle ear that transmit sound vibrations from the eardrum to the inner ear.