To Maintain a Fixed-Exchange-Rate System, If the Exchange Rate Moves

question 51

Multiple Choice

To maintain a fixed-exchange-rate system, if the exchange rate moves below the fixed-exchange-rate level, then the central bank must:

• A) buy foreign currency.
• B) sell foreign currency from reserves.
• C) raise taxes.
• D) decrease government spending.

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Definitions:

Retention

The ability to keep or hold onto information or material learned over time.

Encoded Information

Data that has been converted into a form, using a code, that is not immediately understandable by someone who is not authorized to access it.

Storage

The process or means by which information, data, or materials are kept for future use or reference.

Integration

The process of combining parts into a whole, especially in the context of social and cultural groups within a society.