If the Reserve Bank Sets a Target Exchange Rate That

question 52

Multiple Choice

If the Reserve Bank sets a target exchange rate that is higher than the current exchange rate, then

• A)the Reserve Bank must buy dollars.
• B)the Reserve Bank must sell dollars.
• C)the Reserve Bank will try to print more dollars for foreign distribution.
• D)the Reserve Bank can do nothing in the short run.

---

Definitions:

Demand

Demand is the desire and ability of consumers to purchase goods or services at a given price within a specific time frame.

Usury Laws

Regulations governing the amount of interest that can be charged on a loan, intended to protect consumers from excessively high rates.

Loanable Funds

Financial assets available for borrowing, which play a crucial role in setting interest rates in economics.

Shortage

A scenario in which the need for a product or service surpasses the available supply within a market.