Under a Fixed Exchange Rate Regime,if the Domestic Currency Is

question 39

Multiple Choice

Under a fixed exchange rate regime,if the domestic currency is initially undervalued,that is,above par,the central bank must intervene to sell the ________ currency by purchasing ________ assets.

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

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Definitions:

Marginal Revenue

The additional revenue that a firm receives from selling one more unit of a product.

Barriers to Entry

Obstacles that deter or limit the ease with which newcomers can penetrate an industry or business field.

Government Regulation

Rules established by authorities designed to control and guide the practices of businesses, protect consumers, and support fair market competition.

Marginal Revenue

The increase in revenue that results from selling one additional unit of a product or service.