Under a managed float, if U.S. demand for British goods drops, which of the following actions would the Bank of England need to take in order to stop any movement in the dollar-pound exchange rate?
a. Buy British pounds for dollars in order to shift the demand curve for pounds leftward
b. Sell British pounds for dollars in order to shift the supply curve for pounds leftward
c. Sell British pounds for dollars in order to shift the supply curve for pounds rightward
d. Buy British pounds for dollars in order to shift the demand curve for pounds rightward
e. Do nothing, since purchasing power parity will correct the situation in the short run.
D
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Figure 17-7
The domestic country is Jamaica.
Refer to . With trade, Jamaica
a.
imports 150 calculators.
b.
imports 250 calculators.
c.
exports 100 calculators.
d.
exports 250 calculators.
An accounting identity
A) ensures that all balances will be in equilibrium. B) is useless in analyzing balance of payments since one cannot tell from the identity whether an equilibrium exists or not. C) ensures a balance but does not ensure an equilibrium. D) applies only to plans of economic agents and not to their actual actions.