According to the Monetary Approach of the Balance of Payments

question 49

Multiple Choice

According to the monetary approach of the balance of payments MABP,if the foreign inflation rate decreases 50%,the U.S.foreign reserves will

• A) increase because foreign central bank buys U.S. dollars and sells its currency.
• B) increase because foreign central bank buys its currency and sells U.S. dollars.
• C) decrease because foreign central bank buys U.S. dollars and sells its currency.
• D) decrease because foreign central bank buys its currency and sells U.S. dollars.

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Definitions:

Shut Down

A short-term decision by a firm to cease operations temporarily due to unfavorable market conditions.

ATC Curve

Average Total Cost Curve; a graph that shows the per-unit cost of production at every level of output.

AVC Curve

Average Variable Cost Curve, it represents the change in variable cost associated with producing more units of a good or service.

Variable Input

An input in the production process that can be altered in the short term to adjust the level of output.