Under a Fixed Exchange Rate Regime,if a Central Bank Must

question 79

Multiple Choice

Under a fixed exchange rate regime,if a central bank must intervene to purchase the ________ currency by selling ________ assets,then,like an open market sale,this action reduces the monetary base and the money supply,causing the interest rate on domestic assets to rise.

• A)domestic;foreign
• B)domestic;domestic
• C)foreign;foreign
• D)foreign;domestic

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Definitions:

Product-level Activity

Activities and costs associated with a specific product, rather than with the entire business operation.

Activity-based Costing

A method of allocating indirect costs to products or services based on the activities that generate those costs.

Allocation Rate

A ratio or rate used to distribute overhead or indirect costs to various cost objects based on relevant criteria.

Setups

The preparation and adjustment processes required to make equipment ready for production or to switch production from one item to another, often involving significant time and cost.