A Foreign Exchange Intervention by a Central Bank Affects the Value

question 17

Multiple Choice

A foreign exchange intervention by a central bank affects the value of a country's currency if it:

• A) alters banking system reserves.
• B) leaves domestic interest rates unchanged.
• C) results in a fixed exchange rate.
• D) alters banking system reserves and it changes domestic interest rates.

---

Definitions:

Antibiotic-Resistant Diseases

Conditions caused by bacteria that have evolved to survive treatments with antibiotics previously effective against them.

Socially Optimal Quantity

The level of production of goods and services that maximizes societal welfare, taking into account external costs and benefits.

Antibiotics

Medications used to treat bacterial infections by either killing bacteria or inhibiting their growth.

Socially Optimal Level

The most efficient allocation of resources that maximizes societal welfare, often referenced in discussions of public goods and externalities.