In order to maintain a fixed exchange rate when demand for a domestic currency falls, the government must:
a) use its foreign currency reserves to buy domestic currency.
b) use domestic currency to buy more foreign currency.
c) print more money to boost the money supply.
d) reduce interest rates to attract more demand for domestic currency.
Ans: a) use its foreign currency reserves to buy domestic currency.
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Abby maximizes utility by allocating time among leisure, market work, and nonmarket work so that the
a. total utility of each is equal b. average utility of each is equal c. total utility per hour of each is equal d. marginal utility per hour of each is equal e. maximum amount of goods and services can be acquired