If a Central Bank Does Not Want to See Its

question 7

Multiple Choice

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

• A)fall;strengthening
• B)fall;weakening
• C)rise;strengthening
• D)rise;weakening

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Definitions:

Vertical Analysis

A method of financial statement analysis in which each entry for each of the three major categories of accounts (or financial statements) is represented as a proportion of the total account.

Common-Size Financial Statement

A financial analysis tool that presents all line items as a percentage of a common base figure, making it easier to compare financial statements of different-sized companies.

Vertical Analysis

A method of financial statement analysis in which each entry for a given period is represented as a proportion of a chosen total.

Operating Cycle

The amount of time it takes for a company to purchase inventory, sell it, and convert the sale back into cash.