Which of the Following Policy Measures Is Intended to Influence

question 64

Multiple Choice

Which of the following policy measures is intended to influence the value of the Australian dollar in the long term?

• A) the Australian government negotiates a foreign currency loan
• B) the Reserve Bank of Australia sells foreign reserves in foreign exchange markets
• C) the Australian government implements a contractionary fiscal policy
• D) the Reserve Bank of Australia buys foreign reserves in foreign exchange markets

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Definitions:

Beta Risk

A measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole.

Diversified Portfolio

An investment portfolio constructed to spread risk by selecting assets across various classes.

Rate of Return

The gain or loss on an investment over a specified period, expressed as a percentage of the investment's cost.

Risk-Free Rate

The interest rate that can be earned with certainty, commonly taken to be the rate on short-term Treasury bills.