The Exchange Rate Is Determined by the Interaction of the Supply

question 15

Multiple Choice

The exchange rate is determined by the interaction of the supply and demand for currencies in which exchange rate system is:

• A)fixed.
• B)flexible.
• C)all of the above.
• D)none of the above.

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Definitions:

Monetarists

Monetarists believe in the control of the supply of money as the primary method of controlling inflation and stabilizing the economy.

Balancing the Budget

The process of adjusting income and expenditure so that they equal each other, resulting in neither a budget deficit nor a surplus.

Money Supply

The total amount of monetary assets available in an economy at a specific time, including cash, bank deposits, and other liquid assets.

Expansionary Monetary Policy

A monetary policy approach used by central banks to increase the money supply and lower interest rates, aiming to stimulate economic growth.