The demand for the Franconian franc in the foreign exchange market equals 14,000 - 3,000e and the supply of francs in the foreign exchange market equals 2,000 + 2,000e, where e is the nominal exchange rate expressed in U.S. dollars per franc. If the franc is fixed at 2 U.S. dollars per franc, then to maintain this fixed rate Franconia's international reserves must:
A. increase by 4,000 francs per period
B. decrease by 4,000 francs per period
C. increase by 2,000 francs per period
D. decrease by 2,000 francs per period
Answer: C
Economics
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A) brokerage firms. B) private banks. C) major multinational corporations. D) central banks.
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An increase in money supply causes the real interest rate to ________ and the price level to ________ in general equilibrium.
A. remain unchanged; fall B. rise; rise C. fall; fall D. remain unchanged; rise
Economics