With Fixed Exchange Rates,an Increase in the Foreign Inflation Rate,with

question 15

Multiple Choice

With fixed exchange rates,an increase in the foreign inflation rate,with constant income and domestic credit,will lead to

• A)a change in the exchange rate.
• B)an increase in international reserves.
• C)a decrease in international reserves.
• D)no change in international reserves.

---

Definitions:

Average Total Cost

The total cost of production divided by the total output or quantity of goods produced.

Downward-sloping Market Demand Curve

This concept depicts the inverse relationship between price and quantity demanded in a market, indicating that higher prices typically lead to lower quantities demanded, and vice versa.

Marginal Revenue

The additional income received from selling one more unit of a good or service; it's a critical concept in business and economics for understanding how to maximize profit.

Economies of Scale

Cost advantages that enterprises obtain due to their scale of operation, resulting in the cost per unit of production decreasing with increasing scale.