Albania Wants to Maintain Its Exchange Rate of $0

question 29

Multiple Choice

Albania wants to maintain its exchange rate of $0.20 per lek. However, the market for lek per U.S. dollar has determined an exchange rate of $0.14 per lek (depreciation of the lek against the U.S. dollar) . The Albanian central bank decides to increase the domestic interest rates through a contractionary monetary policy. This would shift the:

• A)supply of lek to the left and cause the lek to lose value.
• B)supply of lek to the right and cause the lek to lose value.
• C)demand of lek to the right and cause the lek to gain value.
• D)demand of lek to the left and cause the lek to lose value.

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Definitions:

Works Council

A works council is a body representing workers, which discusses and sometimes negotiates with management regarding workplace issues, excluding wage negotiations which are often handled by unions.

Workplace-Level Committee

A group within a workplace tasked with addressing specific issues, often related to safety, ethics, or improvement.

Collective Bargaining

The process by which workers, through their unions, negotiate contracts with their employers to determine terms of employment, including wages, benefits, hours, and working conditions.

Legitimizes Capitalism

The process by which capitalist economies are justified and normalized within society, often through legal frameworks, cultural acceptance, and ideological support.