Under a Fixed Exchange Rate, a Balance-Of-Payments Surplus for a Country

question 10

Multiple Choice

Under a fixed exchange rate, a balance-of-payments surplus for a country will lead to a __________ in the money supply as the country's central bank __________ in order to maintain the fixed exchange rate.

• A) rise; purchases domestic currency
• B) rise; purchases foreign exchange
• C) fall; sells domestic currency
• D) fall; sells foreign exchange

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Definitions:

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Substance Abuse

Excessive or addictive use of substances, especially drugs or alcohol, that leads to health issues or social, personal, or economic problems.

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The economic system of the United States, characterized by a mixture of private and public enterprise.

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The process of organizing and planning how to divide one's time between specific activities effectively.