Which of the following is a drawback of a floating exchange-rate system?
A) Inflation is fully transmitted from one country having a higher rate of inflation to another one having a relatively lower rate.
B) Monetary policy is ineffective in raising aggregate demand since it cannot be directed toward achieving internal balance.
C) Overshooting of exchange rates may cause excessive resource shifts into and out of trade oriented industries.
D) Adverse foreign trade shocks are especially damaging since any intervention by the central bank adds to the recession.
Correct Answer:
Verified
Q10: A domestic monetary shock is least disruptive:
A)under
Q11: Which of the following is incorrect?
A)Overall, floating
Q12: Fiscal policy is most effective in influencing
Q13: Which of the following is most likely
Q14: Which of the following is NOT among
Q16: Under a gold standard, a major discovery
Q17: A domestic spending shock are likely to
Q18: If two countries choose to fix the
Q19: Those who advocate a return to a
Q20: Identify the correct statement.
A)International capital-flow shocks are
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents