If a Country Has a Fixed Exchange Rate

question 90

Multiple Choice

If a country has a fixed exchange rate,

• A)the equilibrium exchange rate in that market does not respond to changes in supply and demand for currency.
• B)central banks have more control over real GDP in the economy.
• C)central banks must buy and sell their holdings of currencies to maintain a given exchange rate.
• D)the exchange rate is allowed to fluctuate in response to changes in the supply and demand for currency.
• E)the central bank sets a fixed amount of domestic currency that may be exchanged.

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Definitions:

Homeostasis

The ability of an organism or a system to maintain stable internal conditions despite changes in external environments.

Sleeping

is a natural periodic state of rest for the mind and body, characterized by altered consciousness and reduced responsiveness to external stimuli.

Reticular Formation

A network of nerves in the brainstem that plays a crucial role in controlling arousal and consciousness.

Alertness

The state of being vigilant and awake, capable of quickly responding to stimuli or challenges in the environment.