The reason for calling the current exchange rate system a "managed float" is

a. it is managed by the IMF
b. it is basically a misnomer because it is impossible to "manage" exchange rates
c. it recognizes that there will be some intervention by central banks
d. only the forces of supply and demand determine the exchange rates
e. Congress passed a law declaring that the exchange rate system be legally termed "managed float"


C

Economics

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Suppose Amber Crombie and her husband Fitch spend $1400 this year on healthcare and medicines for the chronic nasal congestion they suffer living next to smelly Lake Lillypad. How does their expenditure affect GDP?

A) It doesn't affect GDP at all. B) GDP would decrease by $1400. C) GDP would increase by $1400. D) GDP would increase by $1400 only if the healthcare and medicines cured their chronic nasal congestion; if it remains uncured, then GDP would remain unchanged.

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What will be an ideal response?

Economics

Real economic activity at full employment is unaffected by changes in investment spending when

A) interest rates are low. B) velocity is flexible. C) inventories are low. D) prices are flexible.

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Equilibrium market prices for capital and labor are $10 and $8, respectively. Then, the economy experiences one or more supply shocks, so that the marginal product of capital is $9, and the marginal product of labor is $6

Assuming that the available quantities of capital and labor are fixed, which of the following is (are) likely to decrease as the economy approaches its new equilibrium? A) economic profits B) real rental price of capital C) total output D) the quantity of capital in use E) none of the above

Economics