If the Central Bank Pegs the Exchange Rate Below Its

question 79

Multiple Choice

If the central bank pegs the exchange rate below its free-market equilibrium level,there will be an ________ of/for foreign exchange,and the central bank will ________ foreign currency.

• A)excess supply; purchase
• B)excess supply; sell
• C)excess demand; purchase
• D)excess demand; sell

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Definitions:

Sharply

A term used to describe a quick and significant change in metrics, such as prices, rates, or quantities.

Tradeable

An asset or item that can be bought, sold, or exchanged in a marketplace.

Governments

Organizational structures with the authority to govern a community, state, or nation, implementing laws, and managing public resources and services.

Tight Control

The rigorous management or governance of operations, activities, or systems to ensure efficiency, compliance, or quality.