Under a managed float,
a. a central bank allows the forces of supply and demand to determine the exchange rate
b. a nation can have neither a trade deficit nor a trade surplus
c. a nation "pegs" its price level to a foreign currency
d. a nation "pegs" its price level at some fixed value
e. a central bank intervenes in the foreign exchange market to stabilize its exchange rate
E
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In 2014, the price of peanuts was rising, which lead peanut butter sellers and peanut butter buyers to expect the price of peanut butter would rise in the future. In the current market for peanut butter, the price rises and the quantity increases
This set of results means that A) demand increased by more than supply decreased. B) supply decreased by more than demand increased. C) demand increased by more than supply increased. D) supply decreased by more than demand decreased.
If a country has an overvaluation problem, the best solution is to
A) increase the official rate. B) buy less of its currency in the foreign exchange market. C) sell more of its currency in the foreign exchange market. D) decrease the money supply.