Which of the Following Statements Is Incorrect

question 41

Multiple Choice

Which of the following statements is incorrect?

• A) A foreign exchange intervention affects the value of a country's currency by changing domestic interest rates.
• B) Any central bank policy that influences the domestic interest rate will affect the exchange rate.
• C) Higher U.S. interest rates would likely result in an appreciation of the U.S. dollar.
• D) Sterilized changes in foreign exchange reserves alter a country's monetary base.

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Definitions:

Property Tax

A levy on property that the owner is required to pay, usually based on the value of the property.

Beekeepers

Individuals who maintain bee colonies, commonly in hives, primarily for collecting honey and other products produced by bees such as bee's wax, propolis, and royal jelly.

Private Solution

A resolution to an economic issue that relies on private transactions without government intervention.

Externality

A consequence of an economic activity that is experienced by unrelated third parties.