The Basic Type of Intervention by Central Banks Under the Managed

question 86

Multiple Choice

The basic type of intervention by central banks under the managed floating exchange rate system is to

• A) readjust the peg for exchange rates.
• B) buy and sell currencies to influence supply and demand for foreign exchange.
• C) renegotiate the rate at which foreign currencies can be converted into gold.
• D) make pronouncements but then do nothing and let the market set the exchange rate.

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Definitions:

United States

A country located in North America, comprising 50 states, a federal district, five major self-governing territories, and various possessions.

Mid 1950s

Refers to the period from 1954 to 1956, a time characterized by post-WWII recovery, significant cultural shifts, and the early stages of the Cold War.

Stabilization Policy

Government policies aimed at stabilizing the economy by reducing fluctuations in production, employment, and prices.

Expected Effects

The anticipated outcomes or results that are predicted to occur as a consequence of a particular action or set of conditions.