If a Nation Wants to Maintain a Fixed Exchange Rate

question 81

Multiple Choice

If a nation wants to maintain a fixed exchange rate at a time when supply and demand are causing an excess of imports over exports, the nation might

• A) shift to a more expansionary monetary policy.
• B) shift to a more restrictive monetary policy.
• C) reduce its trade barriers (tariffs and quotas).
• D) tax exports and subsidize imports.

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Definitions:

Finance Charge

A fee charged for the use of credit or the extension of existing credit, often expressed as an annual percentage rate.

Credit Card Statement

A monthly document provided by credit card companies that details all the transactions, fees, payments, and outstanding balance for the account.

Monthly Credit

Refers to any credit received or applied to an account each month, such as cash back from a credit card or credit for returned items.

Total Cost

The complete amount of money spent on producing or acquiring goods or services, including all variable and fixed costs.