Under a Fixed Exchange Rate System, the Government Bears the Responsibility

question 61

Multiple Choice

Under a fixed exchange rate system, the government bears the responsibility to ensure that the BOP is near zero. If the sum of the current and capital accounts do not approximate zero, the government is expected to intervene in the foreign exchange market by buying or selling official foreign exchange reserves. If the sum of the first two accounts is GREATER THAN ZERO, a ________ demand for the domestic currency exists in the world. To preserve the fixed exchange rate, the government must then intervene in the foreign exchange market and ________ domestic currency for foreign currencies or gold so as to bring the BOP back near zero.

• A) surplus; sell
• B) surplus; buy
• C) deficit; sell
• D) deficit; buy

Realize the importance of strategic thinking and planning in effective management.

Understand the concept of strategic management and its critical elements.

Acknowledge that strategy formulation and execution involve all levels of management.

Comprehend the principles of strategic farsightedness and its impact on management.

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Definitions:

Bias-Motivated Crimes

Crimes that are committed based on prejudice towards the victim's race, religion, ethnicity, sexual orientation, or any other defining characteristic.

Police Brutality

Excessive or unnecessary use of force by police against civilians.

Intractably Opposed

Describes parties or opinions that are so strongly opposed to each other that no agreement or compromise seems possible.

Discrimination

Unjust or prejudicial treatment of different categories of people, especially on the grounds of race, age, sex, or disability.