Suppose That a Central Bank That Fixes Its Exchange Rate

question 153

Multiple Choice

Suppose that a central bank that fixes its exchange rate against other currencies is facing a regular increase of foreign exchange reserves. To offset unwanted changes in the domestic money supply, the central bank could

• A) reset the peg to a higher level.
• B) reduce domestic interest rates.
• C) use a sterilization policy of buying bonds or decreasing banking system reserve requirements.
• D) use a sterilization policy of selling bonds or increasing banking system reserve requirements.

Differentiate between experimental and control groups within the experimental design framework.

Acknowledge the limitations and ethical considerations inherent in experimental research.

Recognize the role of extraneous variables and the need to control them to ensure valid results.

Understand the different research methods, including experimental, descriptive, and correlational, along with their strengths and weaknesses.

---

Definitions:

Insurance Expense

The cost incurred by a business for obtaining insurance coverage against risks, reflected as a periodical premium payment in financial statements.

Credit

The provision of resources (like money) by one party to another, with the expectation of repayment or return in the future.

Accounts Receivable

Signifies the amount of money that customers owe to a business for products or services that have been provided but remain unpaid.

Editing Fees

Charges or costs associated with the professional editing of written material, including books, articles, and reports.