Practice Exam Questions
Fixed versus Floating Exchange Rates (MCQ Revision Question)
- Level:
- AS, A-Level, IB
- Board:
- AQA, Edexcel, OCR, IB, Eduqas, WJEC
Last updated 10 Jun 2017
When might a fixed exchange rate be preferred to a floating currency? This MCQ tests student understanding of this important topic.
Wrong options
A: Floating exchange rate provides partial auto-correction of a trade deficit
B: With fixed exchange rate, interest rates set to maintain currency stability not growth
C: Maintaining a fixed exchange rate requires the central bank to hold larger amounts of foreign currency reserves to intervene in the currency market if needed
You might also like

60 Second Adventures in Economics- The Impossible Trinity
20th September 2012
Exchange Rates - Currency Systems
Study Notes
Exchange Rates - Floating Currencies
Study Notes

econoMAX - How does Quantitative Easing affect the Exchange Rate
7th November 2013
Exchange Rates - An Introduction
Study Notes
Exchange Rates - Fixed Currency Systems
Study Notes
Terms of Trade
Study Notes