By fixing the exchange rate, the central bank gives up its ability to
A) adjust taxes.
B) increase government spending.
C) influence the economy through fiscal policy.
D) depreciate the domestic currency.
E) influence the economy through monetary policy.
E
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At the current level of output, the marginal social cost of tennis balls is greater than the marginal social benefit. Then
A) more than the efficient quantity of tennis balls is being produced. B) there is excess demand for tennis balls. C) firms producing tennis balls must be earning negative profit. D) too few tennis balls are being produced.
Using the data in the above table, if net exports = -$500 billion and the government balances its budget, then
A) the private sector must balance its budget. B) savings must equal $150 billion. C) the private sector runs a surplus of $850 billion. D) saving must equal $650 billion.