Under Fixed Exchange Rates, Domestic Asset Transactions by the Central

question 151

Multiple Choice

Under fixed exchange rates, domestic asset transactions by the central bank

• A) can be used to alter the level of foreign reserves but not to affect the state of employment and output.
• B) cannot be used to alter the level of foreign reserves but only to affect the state of employment and output.
• C) can be used to alter the level of foreign reserves and to affect the state of employment and output.
• D) can be used to alter the domestic money supply and the level of foreign reserves.
• E) can raise output to full-employment level.

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Definitions:

Cash Flow Growth Rate

The rate at which a company's cash flow increases over a specified period, indicating the health and profitability of the business.

Required Rate of Return

The minimal annual revenue percentage that stimulates individuals or companies to direct their funds into a particular security or undertaking.

Borrow

To take or receive something with the intention of returning it, often referring to money with an obligation to pay back the original amount plus interest.

Yearly Payments

Recurrent payments made over the span of a year, often associated with loans, leases, or annuities.