To counteract the depreciation of the national currency against the U.S. dollar, the central bank of a country can intervene in the foreign exchange market. Which of the following imposes a restriction on this ability of the central banks to maintain a fixed exchange rate?
a. The central banks have a limited amount of international reserve.
b. The central banks have a limited amount of domestic currency.
c. Unrestricted sale of foreign currency will cause inflation in the domestic economy.
d. The supply of dollars is perfectly elastic in the foreign exchange market.
e. The central banks need to maintain a certain amount of its assets in the form of gold.
a
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In the figure above, the ________ gap is one trillion dollars. To close the gap, the government can change expenditure by ________ one trillion dollars
A) recessionary; less than B) inflationary; exactly C) inflationary; more than D) recessionary; more than E) recessionary; exactly
State legislators who wanted to eliminate state regulation of the trucking industry would be most likely to find support among
A) business owners who must pay higher prices for deliveries as a result of the regulations. B) owners and managers of large trucking concerns. C) owners of small trucking concerns. D) unions that represent truck drivers.