The buying and selling of foreign currency by the central bank is a trade policy whose objective is:
A. reducing purchases of assets abroad.
B. stabilizing the exchange rate against external shocks.
C. stabilizing the interest rate against foreign capital outflows.
D. promoting long term economic growth.
Answer: B
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Since 2004, the Fed has focused on a core price index that excludes food and energy prices to measure inflation because
A) food and energy are necessities, so consumers have no choice but to purchase these. B) food and energy prices tend to remain stable in the short run, so are not relevant to the calculation of inflation. C) including food and energy prices tends to overstate the true inflation rate by 0.5% to 1%. D) food and energy prices tend to fluctuate up and down for reasons that may not be related to the general causes of inflation.
A positive temporary supply side shock will:
A. increase the level of potential output in the long run. B. decrease the price level in the long run. C. increase the price level in the long run. D. have no effect in the long run.
Core inflation is all of the following but:
A. a measure of inflation that excludes gasoline and food price changes. B. a measure of inflation that excludes goods with historically volatile price changes. C. the BLS's official measure of changes in prices. D. Both an overall rise in prices in the economy.
Which of the following is the most widely used energy source in the world?
A. Fossil fuels B. Hydroelectric energy C. Nuclear energy D. Wind power