In the Diagram Below, Under Fixed Exchange Rates, the Automatic

question 24

Multiple Choice

In the diagram below, under fixed exchange rates, the automatic adjustment mechanism will lead to

• A) a fall in the money supply, a fall in income, and a fall in the interest rate.
• B) a rise in the money supply, a fall in income, and a fall in the interest rate.
• C) a fall in the money supply, a rise in income, and a rise in the interest rate.
• D) a fall in the money supply, a fall in income, and a rise in the interest rate.

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Definitions:

Par Value

A nominal value assigned to a security by the issuer, often used in the context of bonds or stock.

Yielding

The income return on an investment, such as the interest or dividends received from holding a particular security.

FASB 13

Accounting standard issued by the Financial Accounting Standards Board related to lease accounting.

Operating Lease

A lease in which the lessee does not effectively acquire ownership of the leased asset. Accounted for as a stream of expense payments on the income statement. No entry is made on the balance sheet to reflect the acquisition of the asset. The most common form of off balance sheet financing. Compare with Financing lease.