FIGURE 34-5 -Refer to Figure 34-5.If the Supply Curve of Foreign Exchange

question 22

Multiple Choice

FIGURE 34-5
-Refer to Figure 34-5.If the supply curve of foreign exchange shifts from S₀ to S_1,the Bank of Canada could maintain a fixed exchange rate at e₀ by

• A)selling Canadian currency.
• B)holding foreign reserves constant.
• C)buying foreign currency reserves.
• D)selling foreign currency reserves.
• E)lowering the overnight interest rate.

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Definitions:

Unsecured Debt

Unsecured debt refers to loans or credits not backed by collateral, meaning the lender relies on the borrower's promise to pay back the debt.

Securities

Financial instruments that represent ownership positions, debts, or rights to ownership, such as stocks, bonds, and options.

De Jure

Pertaining to law or legal situations, often used to describe something that is legally recognized or established by law.

De Facto

A term used to describe practices or conditions that exist in reality, even if they are not officially recognized by laws.