To Have Adequate Protection to Cover a Depreciation, the Central

question 19

Multiple Choice

To have adequate protection to cover a depreciation, the central bank must keep its foreign currency reserves at the level at which:

• A) they are growing at the same rate as GDP.
• B) they are equal to the demand for money minus the amount of domestic credit (held by the central bank).
• C) they are greater than zero.
• D) they are worth three months of import protection.

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