Under Fixed Exchange Rates, a Central Bank

question 107

Multiple Choice

Under fixed exchange rates, a central bank

• A)adjusts the money supply automatically and immediately to changes in the demand and supply of foreign exchange
• B)need hold no reserves of foreign exchange
• C)enforces the fixed exchange rate by refusing to buy or sell foreign exchange whenever changes occur in demand or supply
• D)may find its reserves fluctuating as demand and supply conditions change
• E)has no authority to buy or sell foreign exchange

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Definitions:

Personal Defenses

Legal arguments an individual can use to avoid enforcement of a contract or agreement, often based on personal circumstances or relationships.

Procedural Defenses

Legal strategies that focus on the method in which a lawsuit was carried out, rather than on the substantive issues.

Negotiable Instrument

A document guaranteeing the payment of a specific amount of money, either on demand or at a set time, which can be transferred to another holder.

Rescission

The legal nullification of a contract, returning all parties involved to their original positions before the contract was made.