When the Domestic Currency Is Initially Undervalued in a Fixed

question 30

Multiple Choice

When the domestic currency is initially undervalued in a fixed exchange rate regime,the central bank must intervene in the foreign exchange market to ________ the domestic currency,thereby allowing the money supply to ________.

• A)purchase;decline
• B)sell;decline
• C)purchase;increase
• D)sell;increase

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Definitions:

Revenue Variance

The difference between how much the revenue should have been, given the actual level of activity, and the actual revenue for the period. A favorable (unfavorable) revenue variance occurs because the revenue is higher (lower) than expected, given the actual level of activity for the period.

Activity Measure

An allocation base in an activity-based costing system; ideally, a measure of whatever causes the costs in an activity cost pool.

Average Actual Selling Price

The mean price at which goods or services have been sold, calculated over a specific period or volume of sales.

Spending Variance

The difference between how much a cost should have been, given the actual level of activity, and the actual amount of the cost. A favorable (unfavorable) spending variance occurs because the cost is lower (higher) than expected, given the actual level of activity for the period.