In the above figure, suppose the demand for dollars temporarily increases so that the demand curve shifts to D1. To maintain the target exchange rate, the Fed
A) can sell dollars.
B) can buy dollars.
C) must violate interest rate parity but not purchasing power parity.
D) cannot maintain the target exchange rate.
A
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If your income goes up by 2% and, in response, the quantity demanded of good x falls by 3%, the good x can be considered
a. An inferior good b. A normal good c. A public good d. A private good
Which of the following is true of other checkable deposits?
a. They are checking account deposits at commercial banks and do not pay any interest. b. They are accounts at financial institutions that pay interest and give the depositor check-writing privileges. c. They comprise solely of demand deposits at mutual savings banks. d. They are not included in the M1 money supply. e. They are savings deposits that earn interest at savings and loan associations.
Congresswoman Gaga represents a state in which several firms manufacture furniture. She wants to impose tariffs on all imported furniture. Which of the following is the least likely consequence of such tariffs?
a. Domestic furniture buyers will lose consumer surplus, have less variety, and will pay higher prices. b. Domestic furniture producers will gain producer surplus. c. Domestic furniture producers will have a higher rate of technological advance. d. Domestic furniture producers will have more market power.
A positive externality or spillover benefit occurs when:
A. product differentiation increases the variety of products available to consumers. B. the benefits associated with a product exceed those accruing to people who consume it. C. a firm does not bear all of the costs of producing a good or service. D. firms earn positive economic profits.