Fixed Exchange Rates Are Often Maintained by Using All of the Following

question 17

Multiple Choice

Fixed exchange rates are often maintained by using all of the following except:

• A)open speculation by individual traders in foreign currency markets.
• B)international monetary reserves held by central banks.
• C)controls on imports and exports such as tariffs and quotas.
• D)domestic macroeconomic adjustments using monetary and fiscal policies.

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Definitions:

Equilibrium Price

The cost at which consumer demand for a product matches the amount producers are willing to supply, resulting in a stable market.

Supply Curve

A graph showing the relationship between the price of a good and the quantity supplied, with price on the vertical axis and quantity on the horizontal axis.

Equilibrium Quantity

The quantity of goods or services supplied and demanded at the point where supply and demand curves intersect.

Equilibrium Price

The market price at which the supply of an item equals the demand for the item, leading to a stable market condition.