Under a fixed exchange rate system, if an appreciation in the value of a country's currency develops, the monetary authorities ________
A) will gain international reserves
B) buy the domestic currency in foreign exchange markets
C) sell foreign exchange in foreign exchange markets
D) will lose international reserves
A
You might also like to view...
Which of the following pairs of goods is likely to be considered substitutes?
A) A Nokia cell phone and a Nokia cell phone charger B) Coffee and sugar C) Printers and printing ink D) A Ford car and public transportation
What is the economic reasoning behind the proposal to legalize drugs?
A. Legal drugs will greatly increase the supply, which will reduce the price Americans pay to foreign producers of the drugs. B. All forms of government restrictions on behavior are immoral and ought to be removed. C. Legal drugs will be much cheaper than illegal drugs, which will reduce incentive for crime to obtain money for drugs and to protect drug “businesses.” D. Legal drugs will be more expensive than illegal drugs, and the market system will encourage more production, thus lowering the price. E. Dealing with supply is always easier than dealing with demand, and legalization accomplishes that.
Which of the following provides a longer run measure of the exchange rate?
a. purchasing power parity (PPP) b. exchange rate c. GDP per capita d. GDP
Which of the following is a form of government intervention that is designed to correct market failures?
A. Merit goods. B. Public goods. C. Antitrust laws. D. Laissez faire.