-In the Above Figure, Suppose the Demand for Dollars Temporarily

question 425

Multiple Choice

-In the above figure, suppose the demand for dollars temporarily increases so that the demand curve shifts to D?. To maintain the target exchange rate, the Fed

• A) can sell dollars.
• B) can buy dollars.
• C) must violate interest rate parity but not purchasing power parity.
• D) cannot maintain the target exchange rate.

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Definitions:

Modernization Theory

A model of economic and social development that explains global inequality in terms of technological and cultural differences between nations.

Industrialized Nations

Countries that have significantly developed their industries and infrastructure, leading to a high standard of living and advanced technological capabilities.

Absolute Poverty

The failure to meet the basic needs of life, including adequate food, clean water, and shelter.

Social Inequality

In a society or group, there are imbalanced chances and advantages for different social positions or statuses.