Under a Floating Exchange Rate Regime, Following an Expansion in the Money

question 37

Multiple Choice

Under a floating exchange rate regime, following an expansion in the money supply, monetary authorities will:

• A)buy foreign currency in the foreign exchange market.
• B)buy domestic currency in the foreign exchange market.
• C)not intervene in the foreign exchange market.
• D)be forced to reverse the monetary expansion.

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Definitions:

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An amount that is subtracted from someone's gross income, reducing the taxable income and thus the amount of tax owed.