Under a fixed exchange rate system, the central bank must
a. have an unlimited supply of domestic currency.
b. have a very large supply of foreign assets.
c. follow a constant money growth rule.
d. allow the money supply to adjust to keep interest rates and exchange rates unchanged.
B
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A ________ is the price at which a trading partner is indifferent between making the trade and not doing so
A) market value B) reservation value C) shadow value D) discounted value
If profits depend on both how much is produced (output) and the level of quality, then a profit-maximizing firm should choose the levels of output and quality at which
A. The marginal revenue of quality exceeds the marginal cost of quality by the largest amount. B. The marginal revenue of output exceeds the marginal cost of output by the largest amount. C. The difference between the addition to total revenue and the addition to total cost of the last units of output and quality is the greatest. D. both a and b E. none of the above