To maintain a fixed exchange rate, when the exchange rate moves above the target level, the central bank must
a. sell foreign currency from reserves.
b. buy foreign currency.
c. raise taxes.
d. raise government spending.
e. pass a law that increases the exchange rate.
B
You might also like to view...
In 2012, real GDP in the United States was below potential GDP. This fact definitely means that
A) the unemployment rate was near 10 percent. B) the unemployment rate was above the natural unemployment rate. C) the economy was in an expansion. D) cyclical unemployment had been decreasing. E) frictional unemployment was negative.
Economic profit equals accounting profit minus
A) explicit costs. B) implicit costs. C) fixed costs. D) variable costs.
The yield curve is the relationship between the:
a. Real interest rate and expected inflation rate. b. Domestic yield and foreign yield. c. Real yield (i.e., interest rate) and actual inflation. d. Nominal yield and time to maturity of a security. e. Nominal yield on corporate securities and the yield of government securities.
When the marginal revenue curve cuts the horizontal axis,
A) demand is relatively elastic. B) demand is relatively inelastic. C) demand is perfectly elastic. D) demand is unitary elastic.