The Demand for the Franconian Franc in the Foreign Exchange

question 113

Multiple Choice

The demand for the Franconian franc in the foreign exchange market equals 14,000 - 3,000e and the supply of francs in the foreign exchange market equals 2,000 + 2,000e, where e is the nominal exchange rate expressed in U.S. dollars per franc. If the franc is fixed at 2 U.S. dollars per franc, then to maintain this fixed rate Franconia's international reserves must:

• A)decrease by 2,000 dollars per period.
• B)decrease by 4,000 dollars per period.
• C)increase by 4,000 dollars per period.
• D)increase by 2,000 dollars per period.

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Definitions:

Loneliness

The subjective feeling of lacking desired social connection, interaction, and intimacy.

Psychological Need

A mechanism for regulating behavior to acquire the tangible or intangible resources necessary forsurvival and well-being.

Self-regulation

The process by which individuals control or adjust their emotions, thoughts, and behaviors in accordance with their goals.

Tangible Resources

Physical or material assets that can be seen, touched, and used, such as money, property, or equipment.