Figure 13.1 -Refer to Figure 13.1.In a Fixed Exchange Rate Regime,if an Rate

question 23

Multiple Choice

Figure 13.1
-Refer to Figure 13.1.In a fixed exchange rate regime,if an economy is experiencing external disequilibrium at point B,then to peg the exchange rate the central bank has to:

• A) buy domestic currency, sell foreign currency, and shift the LM to the right.
• B) buy foreign currency, sell domestic currency, and shift the LM to the right.
• C) buy domestic currency, sell foreign currency, and shift the IS to the left.
• D) buy foreign currency, sell domestic currency, and shift the IS to the right.

---

Definitions:

Analogue Observational Setting

An artificial environment set up in an office or laboratory to elicit specific classes of behaviour in individuals. Used when in vivo observation in the natural environment is impractical because of time constraints and the unpredictability of modern family life.

Subject Reactivity

A phenomenon in which individuals alter their behavior or responses due to their awareness of being observed or studied.

Actuarial Prediction

A method used in various fields, including psychology and criminal justice, that utilizes statistical models to forecast future outcomes based on historical data.