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Author Question: What is the drawback for a country that chooses to fix its exchange rate? a. Fixing the exchange ... (Read 81 times)

daltonest1984

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on: Jun 30, 2018
What is the drawback for a country that chooses to fix its exchange rate?
 a. Fixing the exchange rate can deteriorate the international competitiveness because the real exchange rate can't fluctuate anymore.
  b. Businesses in the country are more exposed to business risks associated with exchange rate changes.
  c. The central bank loses its ability to influence the money supply, unless severe capital controls are imposed.
  d. Fixing the exchange rate has no disadvantages and should be adopted by all countries.

Question 2

Cashing out capital gains in Virtual Currency System 3 (i.e., turning virtual capital gains into real world currencies) causes the nation's:
 a. Monetary base to rise.
  b. M2 money supply to rise.
  c. M2 money multiplier to rise.
  d. Monetary base to remain the same.


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Pswine

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Reply #1 on: Jun 30, 2018
Answer to Question 1

.C

Answer to Question 2

.D


daltonest1984

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Reply 2 on: Jun 30, 2018
YES! Correct, THANKS for helping me on my review

bitingbit

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Reply 3 on: Yesterday
Great answer, keep it coming :)

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