The Demand for the Franconian Franc in the Foreign Exchange

question 131

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

---

Definitions:

Light Breakfast

A small or modest morning meal that is easier to prepare and consume, typically including foods like fruits, bread, or cereals.

Restless Legs Syndrome (RLS)

A neurological disorder characterized by an irresistible urge to move the legs, usually due to uncomfortable sensations.

Caffeine

A stimulant found in coffee, tea, chocolate, and some medications, known for its ability to enhance alertness and focus.

Cognitive Distortions

Faulty or biased ways of thinking that contribute to emotional distress or behavioral problems, often found in various psychological conditions.