Under a fixed exchange standard, if the domestic demand for foreign exchange increases
A) the central monetary authority must meet the demand out of its reserves.
B) the central monetary authority must increase the supply of domestic money.
C) the fixed exchange standard will breakdown.
D) inflation will increase.
E) the domestic currency must be depreciated.
A
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A cost due to an increase in activity is called
A) an incentive loss. B) a marginal cost. C) a negative marginal benefit. D) the total cost.
Refer to the scenario above. The present value of the positive cash flows from the investment in Plan 2 is equal to:
A) $9,209. B) $6,263. C) $15,670. D) $7,537.
One role of the interest rate is to
A) allocate capital to its most efficient uses. B) redistribute income from the wealthy to the poor. C) reduce the rate of inflation by encouraging government borrowing. D) discourage saving and encourage current consumption.
Buck carefully plans out an early morning exercise routine to lose weight and get fit. When it's time to work out, however, Buck just "doesn't feel up to it" and decides to sleep in. Behavioral economics would say that Buck:
A. weighed the costs and benefits and made a rational economic decision to sleep in. B. used System 1 of his brain to formulate his workout plan, but then gave in to System 2 when he chose to sleep in. C. used System 2 of his brain to formulate his workout plan, but then gave in to System 1 when he chose to sleep in. D. is fundamentally lazy and incapable of sticking to a workout plan.