A Foreign Exchange Intervention by a Central Bank Affects the Value

question 17

Multiple Choice

A foreign exchange intervention by a central bank affects the value of a country's currency if it:

• A) alters banking system reserves.
• B) leaves domestic interest rates unchanged.
• C) results in a fixed exchange rate.
• D) alters banking system reserves and it changes domestic interest rates.

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Definitions:

Levied

The imposition or collection of a tax, charge, or fine.

Market Activity

The various transactions, movements, and behaviors of participants that occur within a marketplace, influencing the supply and demand of goods and services.

Taxes

Mandatory monetary fees or different forms of levies collected from taxpayers by government entities to support government expenses and a range of public services.

Buyers

Individuals or organizations that purchase goods or services for personal use, consumption, or to use in the production of other goods and services.