To fix the foreign currency price of domestic currency below the free market equilibrium rate, a government must:
a. sell both its own currency and foreign exchange.
b. buy its own currency and sell foreign exchange.
c. buy both its own currency and foreign exchange.
d. sell its own currency and buy foreign exchange.
e. revalue its own currency.
b
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When economists talk about a "balance of payments" deficit, they refer to a condition in which total debits exceed total credits in the balance of payments account
a. True b. False Indicate whether the statement is true or false
The country of Doomsville is currently in a recession. The government of Doomsville, in an effort to maintain its tax revenues in a time when incomes are falling, decides to increase the tax rate. Would this policy help or hurt the recession?
A) This policy would likely help Doomsville recover faster. B) This policy would likely make Doomsville's recession worse. C) This policy would likely have no effect on Doomsville's economy. D) This policy would have an unknown effect on Doomsville's economy.
Although a corporation that is owned by its member banks, the Federal Reserve System
A. reports directly to the president in an annual report. B. is quite independent of them, and they receive almost none of the Fed’s profits. C. is administered by Congress and all its profits are distributed to the member banks. D. turns all its profits over to the state governments of each district bank.
Which of these policy rule variables does NOT have the disadvantage of being hard to control?
A) nominal GDP growth B) high-powered money C) the unemployment rate D) the inflation rate