Please explain the following:

When multiple countries are trying to boost their economies by lowering the value of their currency, it causes a situation referred to as:

Multiple Choice

• competitive revaluation.
• competitive devaluation.
• a speculative attack.
• speculative war.

If a country has a fixed exchange rate, it:

Multiple Choice

• has a value that is set by the government.
• allows for more predictability and stability.
• helps attract foreign investment and gives businesses that depend on overseas trade more confidence to invest.
• All of these statements are true.

If a country has a floating exchange rate, it means their currency:

Multiple Choice

• is set by the government.
• has a value determined by the market for loanable funds.
• can be freely traded and their value is determined by the market.
• All of these statements are true.