To Maintain a Fixed Exchange Rate,a Central Bank

question 14

Multiple Choice

To maintain a fixed exchange rate,a central bank

• A) must buy up any excess supply of its currency at that rate
• B) must buy up any excess demand for its currency at that rate
• C) must maintain a fixed money supply
• D) must also maintain a fixed interest rate target
• E) should "buy low and sell high"

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Definitions:

Theoretical Incoherence

A lack of logical consistency in the framework of a theory, leading to contradictions or an inability to adequately explain phenomena.

Sampling Bias

A systematic error that occurs in research when the sample is not representative of the population from which it's drawn, potentially skewing outcomes.

Institutional Review Board

A group of scholars within a university who meet regularly to review and approve the research proposals of their colleagues and make recommendations for how to protect human subjects.

Ethics

Ethics involve moral principles that govern a person's behavior or the conduct of an activity, often reflecting what is considered right and wrong.