1. In evaluating fixed versus freely floating exchange rate systems, one must realize that
a. A country's problems are more contagious to other countries in a freely floating exchange rate environment. (not correct)
b. A country's problems can sometimes be alleviated by freely floating exchange rates.
c. The designation of one system as more desirable may depend on a country's political environment, economic conditions, goals, and policies.
d. A freely floating exchange rate system is always superior to a fixed exchange rate system.
2. $20.000 is invested at an 8% annual interest rate. Calculate the amount and total interest earned after 7 years if:
A) the interest is simple.
B) interest is capitalized every month.
C) interest is capitalized at every moment.