Which Is the Following Is True for Countries with Fixed

question 8

Multiple Choice

Which is the following is true for countries with fixed exchange rate regimes?

• A) Central banks of these courtiers are required to maintain exchange reserves to cover 100% of the existing domestic currency
• B) Centrals banks cannot use monetary policy to affect the economic fundamentals (such as inflation)
• C) These countries must use currency board
• D) The external value of the country's currency will simply depreciate to the level at which there is no excess supply of the country's currency

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Definitions:

Double-Declining-Balance

A method of accelerated depreciation where an asset's book value is reduced at double the rate of traditional straight-line depreciation.

Book Value

The net value of an asset, calculated as the original cost minus accumulated depreciation, depletion, or amortization.

Plant Asset

Long-term tangible asset that is used in the production process of a company, such as machinery, buildings, and equipment, contributing to the company's operations.

Depreciation

The process of allocating the cost of a tangible asset over its useful life, reflecting the decrease in value over time.