Currency speculation is _____ if speculators bet against market forces that cause exchange fluctuations, thus moderating such fluctuations ?
Correct answer: B. stabilizing
- A. destabilizing
- B. stabilizing
- C. inflationary
- D. deflationary
Explanation
Speculation is stabilizing when traders bet against a currency movement, selling when its price is rising excessively and buying when it is falling. These actions reduce, rather than amplify, exchange-rate fluctuations.
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About Macroeconomics
The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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