When exchange rates are set by government decree,
A. appreciation is called devaluation.
B. depreciation is called devaluation.
C. depreciation is called deflation.
D. appreciation is called inflation.
Answer: B
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As the federal funds rate changes, other interest rates tend to move in the same direction
Indicate whether the statement is true or false
What factors are not important in determining exchange rate fluctuations in the long run?
A) preferences for domestic and foreign goods across countries B) speculating in currency markets C) relative price levels across countries D) relative rates of productivity growth across countries
When nominal interest rates are high, the velocity of money should:
A. not change; the velocity of money does not vary with the interest rate. B. decrease by the same percent that the nominal interest rate has increased. C. also be high. D. be low.
If reserves increase by $7 million and the required reserve ratio is 12%, what is the resulting change in checkable deposits (or the money supply), assuming that there are no cash leakages and that banks hold zero excess reserves?
A) $0.84 million B) $7.95 million C) $5.83 million D) $58.33 million