A Depreciation of a Currency Below the Exchange Rate Fixed

question 411

Multiple Choice

A depreciation of a currency below the exchange rate fixed by its government can be countered by all of the following measures EXCEPT by:

• A)decreasing capital flows out of the country.
• B)limiting the domestic purchase of foreign financial assets.
• C)decreasing capital flows into the country.
• D)decreasing foreign exchange reserves.

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Definitions:

Penetration Pricing

A strategy of setting a low initial price for a product or service to attract customers quickly and gain market share.

Developmental Costs

Expenses associated with the research and development of a company's goods or services before they can be sold commercially.

Credit Account

is a financial arrangement where a borrower receives something of value now and agrees to repay the lender at a later date, often with interest.

Small Business Owner

A proprietor of a business enterprise that typically has a limited number of employees and a relatively low volume of sales.