If a Government Wishes to Limit or Prohibit Fluctuations in Exchange

question 27

Multiple Choice

If a government wishes to limit or prohibit fluctuations in exchange rates, it will choose:

• A) to fix, or peg, the value of its currency to some base currency over a sustained period.
• B) to allow its currency to rise or fall in price, depending on a variety of supply and demand factors.
• C) to suspend purchases and sales of its currency.
• D) to allow the rate to be set by international banks.

---

Definitions:

Causal Attribution

The process of evaluating the causes of behaviors and events, attributing them to internal or external factors.

Global Assumption

Broad, generalized beliefs that individuals hold about themselves, others, and the world, which shape their perceptions and behaviors.

Degradation

The act or process of degrading or being degraded, often referring to a reduction in dignity, respect, or reputation.

Catharsis

Expression of emotions connected to memories and conflicts, which, according to Freud, leads to the release of energy used to keep these memories in the unconscious.