Examlex
Which of the following functions will most likely have the tallest hierarchy?
Foreign Exchange Reserves
Assets held by central banks in foreign currencies, used to back liabilities on their own currency as well as to influence monetary policy.
Fixed Exchange Rate
A system where the government or central bank sets the official exchange rate in relation to the currency of another nation or the value of gold.
Flexible Exchange Rate
A rate of exchange that is determined by the international demand for and supply of a nation’s money and that is consequently free to rise or fall because it is not subject to currency interventions. Also referred to as a “floating exchange rate.”
Fixed Exchange Rate
A currency system where the value of a currency is pegged against another currency, a basket of currencies, or another measure of value.
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