A Country Wants to Maintain a Fixed Exchange Rate with the Dollar

question 178

Multiple Choice

A country wants to maintain a fixed exchange rate with the dollar, but at the current exchange rate its currency is in excess. The country can adopt all of the following policies to maintain its exchange rate EXCEPT:

• A)buy domestic currency and sell U.S. dollars in the foreign exchange market.
• B)sell domestic currency and buy U.S. dollars in the foreign exchange market.
• C)impose foreign exchange controls.
• D)contract the money supply to raise domestic interest rates.

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Definitions:

Medical Asepsis

Practices in healthcare aimed at reducing the number of pathogens and preventing their spread.

Antiseptic

A substance that prevents the growth of disease-causing microorganisms, commonly used in cleaning wounds and preventing infection.

Dry Heat

A method of sterilization or cooking that involves the use of hot air without moisture.

Sterilization

A process designed to kill or remove all forms of life and other biological agents from a specific surface, area, or item to prevent infection or contamination.