### Understanding Exchange RatesA fixed exchange rate is an important concept in economics and international finance. This type of exchange rate system has implications for how countries manage their currencies in relation to others. **Question:**A fixed exchange rate is an example of:**Select one:**a. a quantity restriction in a market.b. a price control.c. a tax on foreign exchange transactions.d. fiscal policy.---**Explanation:**Here are explanations for each choice provided:- **a. Quantity restriction in a market**: This refers to limits placed on the amount of a specific good that can be bought or sold. This is not what a fixed exchange rate represents.- **b. Price control**: This is the correct answer. A fixed exchange rate acts as a price control mechanism where the government or central bank sets the price of its currency relative to another currency, maintaining a constant exchange rate.- **c. Tax on foreign exchange transactions**: While taxes on foreign exchange transactions can affect the flow and volume of currency trading, they do not equate to a fixed exchange rate.- **d. Fiscal policy**: Fiscal policy involves government spending and tax policies and is different from the concept of a fixed exchange rate, which is part of monetary policy.---**Conclusion:**Understanding fixed exchange rates and how they function helps in comprehending broader economic policies and their impact on global trade and finance. Fixed exchange rates offer stability in international prices and exchange rates but come with their own set of challenges and limitations.For further reading on this topic, explore resources on international monetary systems and exchange rate mechanisms.

A fixed exchange rate refers to a system in which the value of a currency is constant or pegged to…

Answered: exchange example Select one: O a. a…

exchange example Select one: O a. a quantity restriction in a market. O b. a price control. O c. a tax on foreign exchange transactions. O d. fiscal policy.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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