If a Central Bank Does Not Want to See Its

question 20

Multiple Choice

If a central bank does not want to see its currency rise in value,it may pursue ________ monetary policy to ________ the domestic interest rate,thereby weakening its currency.

• A)expansionary;raise
• B)contractionary;raise
• C)expansionary;lower
• D)contractionary;lower

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Definitions:

Miller-Orr Model

A financial model used to manage cash flows and cash reserves, predicting the optimal level of cash balance a company should maintain.

Weekly Interest Rate

The amount of interest charged or earned over a week, often used to describe the rate for loans or savings accounts on a weekly basis.

Disbursements

Payments made by a business in cash or cash equivalents, often pertaining to operating expenses.