To Maintain a Fixed Exchange Rate Under a Shortage of FX

question 162

Multiple Choice

To maintain a fixed exchange rate under a shortage of FX reserves, the government has the following options, except

• A)encourage foreign investment inflows, and restrict foreign investment outflows.
• B)encourage imports, and discourage exports.
• C)impose exchange controls or capital controls.
• D)use monetary or fiscal policies to reduce domestic spending.

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Definitions:

Rule Consequentialism

An ethical theory that suggests the moral correctness of an action depends on the consequences of following rules that are designed to promote the greatest good.

Classical Utilitarians

Philosophers such as Jeremy Bentham and John Stuart Mill who advocated for utilitarianism, a moral theory that actions are right if they result in the greatest happiness for the greatest number of people.

Act Consequentialists

Ethical theorists who evaluate the morality of an action based solely on the outcomes or consequences it produces.

Utilitarian Decision

A decision-making process that maximizes overall happiness and minimizes overall pain, in line with utilitarian principles.