Under a Fixed Exchange Rate Regime, Losses of International Reserves

question 56

Multiple Choice

Under a fixed exchange rate regime, losses of international reserves imply that:

• A)the pressure on a country that needs to devalue it currency is greater.
• B)the pressure on a country that needs to revalue its currency is greater.
• C)countries are not under much pressure to change the value of their currency.
• D)countries can not change the value of their currencies.

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Definitions:

Sales Increases

A measurement of the rise in a company's sales over a specific period, indicating growth in business operations.

Capital Intensity Ratio

A metric used to determine the amount of assets required to generate a dollar of revenue; higher ratios indicate more assets are needed.

Accounts Payable

Financial obligations or debts owed by a company to its creditors or suppliers for goods and services received.

Net Income

Refers to the total profit of a company after all expenses and taxes have been subtracted from revenue.