If the Goal Were to Increase the Value of a Country's

question 1

Multiple Choice

If the goal were to increase the value of a country's currency - to fight an depreciation of the domestic currency in exchange for foreign currency - the central bank would:

• A) buy its own currency in exchange for foreign currency.
• B) follow a expansive monetary policy.
• C) drive real rates of interest down.
• D) sell its own currency in exchange for foreign currency.

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Definitions:

Interest Rates

The cost of borrowing money or the return for lending money, typically expressed as an annual percentage rate.

Yield To Maturity

The total return anticipated on a bond if the bond is held until its maturity date, including both interest payments and capital gains.

Annual Coupon

The annual interest payment made to bondholders, typically expressed as a percentage of the bond's face value.

Par Value

A nominal value assigned to a share of stock or bond that is typically printed on the face of the certificate.