Assume That Policy Makers Are Pursuing a Fixed Exchange Rate

question 5

Multiple Choice

Assume that policy makers are pursuing a fixed exchange rate regime and that output is initially greater than the natural level of output. The economy will tend to move toward the natural level of output when which of the following occur?

• A) An increase in the foreign price level.
• B) A decrease in the domestic interest rate.
• C) A devaluation of the currency.
• D) An increase in the price level.
• E) An increase in money supply.

---

Definitions:

Income Statement

A document presenting a firm's income, expenses, and profits during a certain timeframe.

Distribution

The process of making a product or service available for the user or consumer.

Merchandise

Products or goods that a company holds for the purpose of selling to customers.

Terms

The conditions and stipulations outlined in an agreement or contract, specifying the obligations, rights, and responsibilities of each party involved.