If a Central Bank Does Not Want to Allow the Domestic

question 108

Multiple Choice

If a central bank does not want to allow the domestic currency to appreciate,it will ________ international reserves by selling its currency,thereby ________ the monetary base and increasing the risk of higher inflation.

• A)lose;decreasing
• B)lose;increasing
• C)acquire;decreasing
• D)acquire;increasing

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Definitions:

Fixed Costs

Costs that do not vary with the level of production or sales, such as rent, salaries, and loan payments.

Profit Maximization

A financial strategy aimed at achieving the highest possible profit level for a business by adjusting output levels, pricing, or reducing costs.

Marginal Social Cost

The incremental cost borne by society due to the production of an extra unit of a good or service.

iTunes Download

A digital file, such as music or a movie, purchased and downloaded from Apple's iTunes platform.