Under Fixed Exchange Rates, a Central Bank

question 107

Multiple Choice

Under fixed exchange rates, a central bank

• A)adjusts the money supply automatically and immediately to changes in the demand and supply of foreign exchange
• B)need hold no reserves of foreign exchange
• C)enforces the fixed exchange rate by refusing to buy or sell foreign exchange whenever changes occur in demand or supply
• D)may find its reserves fluctuating as demand and supply conditions change
• E)has no authority to buy or sell foreign exchange

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Definitions:

Cycles

Sequences of events that repeat in a regular and predictable manner, such as the water cycle or menstrual cycle.

Non-REM Sleep

A phase of sleep characterized by slower brain waves and reduced eye movement, distinct from REM sleep where dreaming occurs.

Dreaming

A mental activity that occurs during sleep, characterized by vivid narratives or images.

REM Sleep

A phase of sleep characterized by rapid eye movement, during which dreaming often occurs and brain activity is similar to that of being awake.