The central bank of Alanza, a developing economy, persistently intervenes in the foreign exchange market to prevent its currency from appreciating against the dollar. Which of the following is the most probable consequence of this intervention by the central bank?
A. Alanza's exports will decline in the near future.
B. Alanza's trade deficit with the United States will increase.
C. The money supply in Alanza will decline.
D. The rate of inflation in Alanza will increase.
Answer: D
You might also like to view...
A key reason for the existence of firms is that, compared to markets, firms often achieve lower
A) explicit costs. B) transactions costs. C) accounting costs. D) scope of team production.
Refer to Figure 4-8. Suppose that instead of a rent ceiling, the government imposed a price floor of $2,000 per month for apartments. What is the value of the deadweight loss after the imposition of the price floor?
A) $50,000 B) $125,000 C) $175,000 D) $260,000
The concept of inequality
A. has no economic meaning. B. applies to low income countries only. C. is an extension of relative poverty. D. is only a theoretical concept.
Which of the following could cause the supply of carrots to decrease?
a. Consumers' incomes decrease. b. There is a technological advance in carrot production. c. Fertilizer costs increase. d. The number of farmers growing carrots increases. e. The price of carrots decreases.