One Argument Favoring a Fixed-Exchange-Rate System Is That It

question 23

Multiple Choice

One argument favoring a fixed-exchange-rate system is that it:

• A) allows monetary policy to be used for stabilizing output and prices.
• B) reduces exchange-rate uncertainty, thereby promoting more international trade.
• C) leads to excessive growth of the money supply.
• D) requires no actions on the part of the central bank to implement.

---

Definitions:

Intensity of Competition

The degree of rivalry among firms in a particular market, heavily influencing their pricing, marketing, and product development strategies.

Lobby Government

The act of attempting to influence government officials' decisions or policies, typically conducted by individuals, companies, or organizations.

Restrict Entry

The act of limiting access or entrance into a market or sector to control competition and maintain market power.

Total Profit

The sum of net gains, representing the total revenue from transactions minus the total costs associated with those transactions.