Suppose That Econland Adopts a fiXed Exchange-Rate System and Pegs

question 16

Multiple Choice

Suppose that Econland adopts a fixed exchange-rate system and pegs the value of its peso to the U.S. dollar. If Econlanders' demand for dollars increases in the foreign exchange markets, then
Econland's foreign-exchange reserves will

• A) increase.
• B) decrease.
• C) stay the same.
• D) equal the trade balance.

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Definitions:

Pseudocoma

A condition in which an individual appears to be in a coma but is actually aware and conscious.

RAS

Acronym for the Reticular Activating System, a network of neurons located in the brainstem that regulates wakefulness and sleep-wake transitions.

Sleep-Wake Cycle

The circadian rhythm that regulates periods of sleepiness and wakefulness throughout a 24-hour period.

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A rare condition with symptoms that can include sleep paralysis and cataplexy.