Under a Fixed Exchange Rate Regime,if a Central Bank Must

question 15

Multiple Choice

Under a fixed exchange rate regime,if a central bank must intervene to purchase the domestic currency by selling foreign assets,then,like an open market sale,this action ________ the monetary base and the money supply,causing the interest rate on domestic assets to ________.

• A)increases;rise
• B)increases;fall
• C)reduces;rise
• D)reduces;fall

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Definitions:

Pioneering

The activity of being among the first to explore or introduce a new concept, area, or market.

Early-Warning Device

A system or tool designed to alert individuals or organizations to potential problems or risks before they escalate.

Natural Gas Industry

A sector of the economy that involves the exploration, extraction, processing, transportation, and marketing of natural gas.

Competitive

Relates to entities involved in or characterized by competition, striving to gain advantage over others in the same field.