Under a Floating System, the Exchange Rate

question 79

Multiple Choice

Under a floating system, the exchange rate:

• A) fluctuates in response to changing economic conditions.
• B) is maintained at a predetermined level by the central bank.
• C) is changed at regular intervals by the central bank.
• D) fluctuates in response to changes in the price of gold.

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Definitions:

Marginal Cost

The expenditure required to produce an extra unit of a good or service.

Fixed Cost

A cost that does not change with an increase or decrease in the amount of goods or services produced.

Lawn-mowing

The process of cutting the grass in a lawn to maintain its appearance and health.

Variable Costs

Costs that vary directly with the level of production output, such as materials and labor.