If a Country Has a Fixed Exchange Rate

question 156

Multiple Choice

If a country has a fixed exchange rate

• A)the equilibrium exchange rate in that market does not respond to changes in supply and demand for currency.
• B)central banks have more control over real GDP in the economy.
• C)central banks must buy and sell their holdings of currencies to maintain a given exchange rate.
• D)the exchange rate is allowed to fluctuate in response to changes in the supply and demand for currency.

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Definitions:

Response Cost Lottery

A technique in which every student has an envelope taped to his or her desk. The teacher places five or more tickets in each envelope with the student’s name written on each ticket. Students lose a ticket every time they engage in one of three inappropriate behaviors specified by the teacher. At the end of a prespecified time, the remaining tickets are placed in a grab bag and mixed up. The teacher draws three or four tickets, and the students whose names appear on the tickets win a reward.

Inappropriate Behaviors

Actions or responses considered unacceptable or improper within a given context or environment, often addressed in behavioral interventions.

Grab Bag

A term often used to describe a varied collection of objects or ideas brought together randomly or for a specific purpose, akin to a miscellaneous category.

Escape Behaviors

Actions taken to terminate or avoid unpleasant stimuli or situations, often considered in the context of negative reinforcement.