Suppose That the Fed Increases the U

question 32

Multiple Choice

Suppose that the Fed increases the U.S.money supply and the Bretton Woods system of fixed exchange rates is still in place.Then to maintain the fixed exchange rate,foreign central banks intervene by:

• A) Raising the interest rate on dollars.
• B) Buying dollars and selling its currency.
• C) Raising the interest rate on its currency.
• D) Selling dollars and buying its currency.

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Definitions:

Privatizing

The process of transferring ownership of a business, enterprise, agency, or public service from the government to private individuals or organizations.

Natural Resources

Materials or substances occurring in nature which can be exploited for economic gain, such as minerals, forests, water, and fertile land.

Anthropologists

Scientists who study human societies, cultures, and their development.

Conspicuous Consumption

The spending of money on and the acquisition of luxury goods and services to publicly display economic power, status, or wealth.