East Asian Economies Have Been Able to Run Persistent Current

question 33

Multiple Choice

East Asian economies have been able to run persistent current account surpluses because their governments

• A) pegged their currencies to the dollar at overvalued exchange rates and engaged in sterilized money supply intervention.
• B) pegged their currencies to the dollar at competitive exchange rates and let their money supply increase to match current account surpluses.
• C) pegged their currencies to the dollar at competitive exchange rates and decrease their money supply.
• D) pegged their currencies to the yen at undervalued exchange rates and engaged in currency speculation.
• E) pegged their currencies to the renminbi at competitive exchange rates and engaged in sterilized intervention.

---

Definitions:

Labor Supply Curve

A graphical representation showing the relationship between the quantity of labor willing to work and the wage rate.

Indifference Curves

A graphical representation used in economics to show different combinations of two goods that give a consumer equal satisfaction and utility.

Utility Maximizes

The behavior of consumers to obtain the greatest satisfaction from their choices, given their resources.

Substitution Effect

The change in demand for a good or service caused by a change in its price, making consumers choose alternatives.