Under a Fixed Exchange Rate Regime,if a Central Bank Must

question 15

Multiple Choice

Under a fixed exchange rate regime,if a central bank must intervene to purchase the domestic currency by selling foreign assets,then,like an open market sale,this action ________ the monetary base and the money supply,causing the interest rate on domestic assets to ________.

• A)increases;rise
• B)increases;fall
• C)reduces;rise
• D)reduces;fall

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Definitions:

Standardize

The process of making something conform to a standard.

MRO Supplies

Maintenance, Repair, and Operations (MRO) supplies are goods used in the production process but do not become part of the end product, including lubricants, safety equipment, and cleaning supplies.

Decentralization

The distribution of decision-making power away from a central authority, allowing for more localized or divisional decision control.

Organization Structure

The arrangement of roles, responsibilities, and relationships within an organization, determining how information flows and decisions are made.