With a Fixed Exchange Rate, When the Quantity Supplied Exceeds

question 28

Multiple Choice

With a fixed exchange rate, when the quantity supplied exceeds the quantity demanded, the central bank must intervene in the foreign exchange market and

• A) buy reserve currencies and the domestic currency.
• B) sell reserve currencies and the domestic currency.
• C) support stock market prices.
• D) sell reserve currencies and buy the domestic currency.
• E) sell bank stocks to support consumer confidence.

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Definitions:

Cytoplasm

The gel-like substance within a cell, excluding the nucleus, that contains organelles and is the site of numerous metabolic reactions.

Nucleus

A central and most important part of an object, movement, or group, forming the basis for its activity and growth, or in a biological context, the membrane-bound organelle found in eukaryotic cells that contains most of the cell's genetic material.

Nuclear Membrane

The double-layered membrane that encloses the nucleus of a eukaryotic cell, controlling the flow of substances in and out of the nucleus.

Centrosome

A cellular structure important in the process of cell division, serving as the main microtubule organizing center of animal cells.