Under Fixed Exchange Rates, Domestic Asset Transactions by the Central

question 151

Multiple Choice

Under fixed exchange rates, domestic asset transactions by the central bank

• A) can be used to alter the level of foreign reserves but not to affect the state of employment and output.
• B) cannot be used to alter the level of foreign reserves but only to affect the state of employment and output.
• C) can be used to alter the level of foreign reserves and to affect the state of employment and output.
• D) can be used to alter the domestic money supply and the level of foreign reserves.
• E) can raise output to full-employment level.

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