Asked by Chetan Aggarwal on Jul 09, 2024
Verified
Which of the following statements is not true in the current exchange-rate system?
A) Major currencies like the U.S. dollar, euro, pound, and yen operate mostly in a flexible system responding to supply and demand forces.
B) Some developing nations peg their currencies to the dollar and allow their currencies to fluctuate with it relative to other currencies.
C) Each country uses its own unique currency; for example, only the U.S. uses the U.S. dollar as its currency.
D) Many nations peg their currencies to a "basket," or group, of other currencies, rather than to a single other currency.
Exchange-rate System
The method by which a country manages its currency in relation to other currencies and determines its exchange rate.
Flexible System
An adaptable framework or methodology that can adjust to changes in environment or operation, often seen in production, management, or scheduling.
Major Currencies
The world's most widely traded currencies, typically including the US Dollar, Euro, Japanese Yen, and British Pound among others.
- Acquire knowledge on the basics of exchange rates and understand their divisions such as flexible, fixed, and managed floating.
- Assess how different exchange rate frameworks affect international trade and financial operations.
Verified Answer
LM
Lakithia McmullenJul 12, 2024
Final Answer :
C
Explanation :
Explanation: Statement C is not true because there are territories and countries other than the U.S. that use the U.S. dollar as their official or de facto currency. Examples include Ecuador, El Salvador, and Panama. The other statements accurately describe aspects of the current exchange-rate system.
Learning Objectives
- Acquire knowledge on the basics of exchange rates and understand their divisions such as flexible, fixed, and managed floating.
- Assess how different exchange rate frameworks affect international trade and financial operations.