Refer to Figure 20.5 for the Following Questions

question 39

Multiple Choice

Refer to Figure 20.5 for the following questions.
Figure 20.5
-Assume that the Thai government wants to maintain an exchange rate of 0.04 baht per US dollar,as shown in Figure 20.5.If the Thai central bank pursues a contractionary monetary policy,how will that affect the number of baht the central bank must buy or sell to maintain the peg at 0.04 baht per US dollar?

• A) They must purchase more than 100 million baht per day with US dollars.
• B) They must purchase less than 100 million baht per day with US dollars.
• C) They must purchase exactly 100 million baht per day with US dollars.
• D) They do not have to do anything.

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Definitions:

Accounts Receivable

Money owed to a company by its customers for goods or services that have been delivered but not yet paid for.

Non-Controlling Interest

A stake in a company that is not large enough to control company decisions, representing ownership by minority shareholders in a subsidiary not wholly owned by the parent.

Equity Method

An accounting technique used to record investments in other companies, where the investment is initially recorded at cost and adjusted thereafter for the investor's share of the investee's profit or losses.

Dividends

Payments made by a corporation to its shareholder members, usually derived from the company's profits.