If a Central Bank Wants to Keep the Value of Its

question 97

Multiple Choice

If a central bank wants to keep the value of its home currency fixed in the foreign exchange market, then an increase in the demand for its home currency will lead the central bank to

• A) do nothing.
• B) sell its home currency.
• C) buy its home currency.
• D) sell foreign currencies.

---

Definitions:

Supply Depot

A facility used for the storage and distribution of goods and materials.

Map Coordinates

A system of numbers that uniquely identifies positions on the surface of the earth or a map, often represented in latitude and longitude or an alphanumeric grid.

Tonnage

A measure of weight or volume used to quantify the size or cargo capacity of ships, or the output of a production process.

Labour Climate

The overall environment and conditions affecting labor relations, including workers' attitudes, union activities, and employer-employee negotiations.