How does an economy's central bank manage the supply of money through official reserve transactions?
What will be an ideal response?
Official foreign exchange interventions are a way for the central bank to inject money into the economy or withdraw it from circulation. They can buy or sell international reserves in private asset markets in order to alter macroeconomic conditions without noticeably impacting the money supply. When a central bank purchases or sells a foreign asset, the transaction appears in its country's financial account as if a private citizen had carried out the same transaction.
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A profit maximizing monopoly's price is
A) not consistently related to price that would prevail if the market was perfectly competitive. B) greater than the price that would prevail if the industry was perfectly competitive. C) less than the price that would prevail if the industry was perfectly competitive. D) the same as the price that would prevail if the industry was perfectly competitive.
In the IS equation, which of the following is an exogenous variable?
A) planned investment spending B) real interest rate C) consumption D) all of the above E) none of the above