To Counteract the Depreciation of National Currency Against the U

question 45

Multiple Choice

To counteract the depreciation of national currency against the U.S.dollar, the central bank of a country can intervene in the foreign exchange market.Which of the following imposes a restriction on this ability of the central banks to maintain the fixed exchange rate?

• A)The central banks have a limited amount of international reserve.
• B)The central banks have a limited amount of domestic currency.
• C)Unrestricted sale of foreign currency will cause inflation in the domestic economy.
• D)The supply of dollars is perfectly elastic in the foreign exchange market.
• E)The central banks need to maintain a certain amount of its assets in the form of gold.

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Definitions:

Revenue Collection

Revenue collection is the process by which governments or organizations collect money, often in the form of taxes, duties, or fees, from individuals or businesses.

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Quarterly Targets

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Calm and Confident

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