Exchange Rates Change Because of Relative

question 53

Multiple Choice

Exchange rates change because of relative

• A)Income changes but not relative price changes.
• B)Price changes but not relative interest rate changes.
• C)Interest rate changes but not relative income changes.
• D)Income,relative price,and relative interest rates of countries.

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Definitions:

Excess Reserves

Excess reserves are the funds that banks hold over and above the required minimum reserves mandated by central banking regulations, often stored in central banks.

Treasury Bonds

Long-term government securities issued by the U.S. Department of the Treasury. They carry a fixed interest rate and have maturities ranging from 20 to 30 years.

Money Supply

The comprehensive sum of all available financial assets within an economy at a particular time, including cash, coins, and account balances in checking and savings.

Reserve Requirement

The lowest level of reserves that financial institutions are required to maintain against deposits, determined by central banks to manage the amount of money in circulation.