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Social Science Clinic => Economics => Topic started by: CharlieWard on May 25, 2020

Title: Which of the following is NOT a reason for exchange rate volatility?
Post by: CharlieWard on May 25, 2020

Question 1

Which of the following is NOT a disadvantage of floating exchange rates?
◦ Exporting or importing is risky for companies.
◦ Speculation can be destabilising.
◦ Exchange rates may be unstable.
◦ Domestic policy is more constrained by the balance of payments.

Question 2

Which of the following is NOT a reason for exchange rate volatility?
◦ Reluctance of governments to change interest rates to influence domestic policy
◦ Speculation by firms engaged in exporting and importing
◦ Abolition of exchange controls
◦ Uncertainty about future exchange rates

Title: Which of the following is NOT a reason for exchange rate volatility?
Post by: poopface on May 25, 2020

Answer 1

Domestic policy is more constrained by the balance of payments.

Answer 2

Reluctance of governments to change interest rates to influence domestic policy