If Central Banks Were No Longer Obliged to Intervene in Currency

question 146

Multiple Choice

If central banks were no longer obliged to intervene in currency markets to fix exchange rates, governments would be able to use monetary policy to reach

• A) internal balance.
• B) external balance.
• C) internal and external balance.
• D) internal but not external balance.
• E) external but not internal balance.

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Definitions:

Forecasting Economic Variables

The process of making predictions about future economic activity based on historical and current data, using statistical models and analysis techniques.

Disinflation

Occurs when the rate of inflation declines.

Monetarist View

An economic theory which argues that management of the nation's money supply is the key to controlling inflation and other forms of economic instability.

Economic Stabilization

Efforts or policies aimed at maintaining economic growth, controlling inflation, and reducing unemployment to achieve a stable economy.