In Response to the Overvalued Dollar in the Early 1970s,the

question 5

Multiple Choice

In response to the overvalued dollar in the early 1970s,the German Bundesbank bought dollars and sold marks to keep the exchange rate fixed,gaining international reserves. The huge purchase of international reserves meant that the German monetary base began to ________,leading to ________ growth in the German money supply.

• A)decline;sluggish
• B)decline;rapid
• C)grow;sluggish
• D)grow;rapid

---

Definitions:

New System Alternative

A proposed solution or technology that aims to replace or improve upon an existing system.

Net Present Value

The difference between the present value of cash inflows and outflows over a period, used to assess the profitability of investments.

Present Value

The current value of a future sum of money or stream of cash flows given a specified rate of return, accounting for time value of money.

Annual Cost Savings

The reduction in costs achieved during a specific year, often through efficiency improvements or expense cuts.