The downside (negative aspect) associated with a free and floating exchange rates is that
a. countries appreciate their rates so that the float is only upward
b. they depend on trade agreements that can, and have been, broken
c. whether they increase or decrease, it takes currency to float the rate
d. arbitrage takes advantage of different opportunity costs
e. it creates an uncertainty about future rates that can reduce trade
E
Economics
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a. True b. False Indicate whether the statement is true or false
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The situation in which short-term interest rates are pushed to zero, leaving the central bank unable to lower them further is known as
A) the Taylor rule. B) a liquidity trap. C) a zero-sum game. D) an interest rate panic.
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