If a Country Starts with a Deficit in Its Official

question 59

Multiple Choice

If a country starts with a deficit in its official settlements balance, intervention to defend a fixed exchange rate will cause:

• A)the money supply to expand and the economy to grow.
• B)both the money supply and the economy to contract.
• C)the money supply to grow and the economy to contract.
• D)the money supply to contract and the economy to grow.

Understand the importance of interest rate parity in the determination of forward exchange rates.

Calculate the real rate of return on foreign investments taking into account inflation and exchange rate movements.

Understand the basic concepts of Jean Piaget's stages of cognitive development and their characteristics.

Identify the significance of the concept of object permanence and its development stage.

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Definitions:

Behaviorism

A theory of learning based on the idea that all behaviors are acquired through conditioning, emphasizing observable behaviors over internal phenomena like thoughts and feelings.

Psychoanalysis

A therapeutic approach developed by Sigmund Freud that aims to explore the unconscious mind to resolve repressed conflicts and psychological problems.

Sensorimotor Stage

The first of the four stages of cognitive development in Piaget's theory, spanning from birth to about 2 years of age, where infants learn through interacting with the world using their senses and motor skills.

Erikson's Eight Ages

A theory of psychological development proposed by Erik Erikson, comprising eight sequential stages across the lifespan, each characterized by a central conflict.