How does an economy's central bank manage the supply of money through official reserve transactions?
What will be an ideal response?
Official foreign exchange interventions are a way for the central bank to inject money into the economy or withdraw it from circulation. They can buy or sell international reserves in private asset markets in order to alter macroeconomic conditions without noticeably impacting the money supply. When a central bank purchases or sells a foreign asset, the transaction appears in its country's financial account as if a private citizen had carried out the same transaction.
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Which of the following is consistent with the law of demand?
A. An increase in the price of hamburgers causes a decrease in the quantity of hamburgers demanded. B. A decrease in the price of tacos causes sellers to want to sell less. C. A decrease in the price of egg rolls causes a decrease in the quantity of egg rolls demanded. D. An increase in the people's craving for pizza causes buyers to buy more pizza.
This Application examines the concept of
A) sticky prices. B) consumer spending habits. C) stagflation. D) the wealth effect.
How many British pounds would it cost to buy a pair of American designer jeans costing $45 if the exchange rate is 1.80 dollars per British pound?
A) 10 British pounds B) 25 British pounds C) 20 British pounds D) 30 British pounds E) 40 British pounds
The reduction of the inflation rate is called
A) deflation. B) disinflation. C) unflation. D) reflation.