Suppose That Econland Adopts a Fixed Exchange-Rate System and Pegs

question 274

Multiple Choice

Suppose that Econland adopts a fixed exchange-rate system and pegs the value of its peso to the U.S. dollar. If people's demand for pesos increases in the foreign exchange markets, then Econland's foreign-exchange reserves will

• A)increase.
• B)decrease.
• C)stay the same.
• D)equal the trade balance.

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Definitions:

Violence

Behavior involving physical force intended to hurt, damage, or kill someone or something.

Hydraulic Model

A theory suggesting that emotional pressure builds up within individuals and must be released to avoid psychological issues, akin to the way hydraulic pressure builds and must be released.

Cathartic Therapies

Psychological treatments that encourage patients to express their feelings and emotions as a way of reducing stress and improving mental health.

Descriptive Norm

The perception of what is commonly done or typical behavior within a specific context or group of people.