Chap002 43 - C. governments can set exchange rates with...

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55. Under a flexible exchange rate regime, governments can retain monetary policy independence because the external balance will be achieved by A. the exchange rate adjustments. B. the price-specie flow mechanism. C. the Triffin paradox. D. none of the above Topic: Evolution of the International Monetary System Topic: The Flexible Exchange Rate System 56. The choice between the alternative exchange rate regimes (fixed or floating) is likely to involve a trade-off between A. national monetary policy autonomy and international economic integration. B. exchange rate uncertainty and national policy autonomy. C. Balance of Payments autonomy and inflation. D. unemployment and inflation. Topic: Evolution of the International Monetary System Topic: The Flexible Exchange Rate System 57. Under a purely flexible exchange rate system A. supply and demand set the exchange rates. B. governments can set the exchange rate by buying or selling reserves.
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Unformatted text preview: C. governments can set exchange rates with fiscal policy. D. answers b) and c) are correct. 58. A currency board arrangement is A. when the currency of another country circulates as the sole legal tender. B. when the country belongs to a monetary or currency union in which the same legal tender is shared by the members of the union. C. a monetary regime based on an explicit legislative commitment to exchange domestic currency for a specified foreign currency at a fixed exchange rate, combined with restrictions on the issuing authority to ensure the fulfillment of its legal obligation. D. where the country pegs its currency at a fixed rate to a major currency where the exchange rate fluctuates within a narrow margin of less than one percent. Topic: Current Exchange Rate Arrangements...
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