If the Deutsche Mark and the British Pound Exchange Rates

question 29

Multiple Choice

If the Deutsche Mark and the British pound exchange rates are fixed, and the German Bundesbank conducts a tight monetary policy to counteract an expansion in German GDP, interest rates in Germany will ____, which will force Britain to ______.

• A) fall; default
• B) rise; raise its rates to maintain interest parity and the fixed exchange rate
• C) fall; sell gold
• D) rise; lower its rates to maintain interest parity and the fixed exchange rate

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Definitions:

Membrane-Bound Receptor

Receptor molecule, such as a hormone receptor, that is bound to the plasma membrane of the target cell.

Cyclic GMP

Cyclic GMP (cGMP) is a secondary messenger important in many biological processes, including vision and vasodilation.

Water-Soluble Hormones

Hormones that are soluble in water, allowing them to circulate freely in the blood and interact with specific receptors.

Plasma Membrane

The bilayer of lipids surrounding the cell's cytoplasm, which controls the passage of elements into and out of the cell.