Exhibit 20-7 Imagine There Are Only Two Countries in the World

question 198

Multiple Choice

Exhibit 20-7 Imagine there are only two countries in the world, Mexico and Canada, and two currencies, pesos and Canadian dollars.If Mexico's central bank wants to protect its currency from depreciating in response to the demand shift shown in Exhibit 20-7, which of the following is most likely to be the policy it will choose?

• A)increasing the supply of pesos
• B)decreasing the supply of Canadian dollars
• C)purchasing Canadian dollars with newly issued pesos
• D)purchasing pesos with reserves of Canadian dollars
• E)selling pesos to Canadians

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Definitions:

Eavestroughs

Gutters fixed beneath the edge of a roof for draining rainwater from a roof.

Shortcut

A more direct route or method than the usual one, often used to save time or effort.

Neighbour's Backyard

The outdoor area or garden located at the back of a neighbor's house, often referenced in discussions about privacy and property boundaries.

Walk Home

The act of going back to one's place of residence on foot.