Under fixed exchange rates, the central bank _____________control of the domestic money supply. Select one: a....
Under fixed exchange rates, the central bank _____________control of the domestic money supply.
Select one:
a. gains
b. ensures it can
c. has complete
d. loses
Homework Answers
In fixed exchange rates, arbitrage exists. Thus, and any change (made by central bank to control exchange rate at fixed level) in money supply is not sustainable. So, Central bank looses the control of the domestic money supply.
Correct option is
d) loses
Add Answer to:
Under fixed exchange rates, the central bank
_____________control of the domestic money supply.
Select one:
a....
The sum of currency and bank deposits at the central bank is called: a. the money...
The sum of currency and bank deposits at the central bank is called: a. the money supply. b. domestic assets. c. the monetary base. d. fractional reserves. Official intervention in the foreign exchange market to defend a fixed exchange rate when the value of the country's currency is under downward pressure causes a. international reserve holdings to rise. b. a downward pressure on the country's interest rates. c.an increase in the liabilities of the central bank. d. the domestic money...
6) Using money supply-money demand and the interest rate parity relationship, show how the central bank...
6) Using money supply-money demand and the interest rate parity relationship, show how the central bank can maintain fixed exchange rates in the face of changes in output. 7) Using the DD-AA model under fixed exchange rates, show the effects of monetary policy. What are the main results? 8) Using the DD-AA model under fixed exchange rates, show the effects of fiscal policy. What are the main results? 9) Using the DD-AA model under fixed exchange rates, show the effects...
27. At the current fixed exchange rate, the Central Bank of Boblandia needs to buy domestic...
27. At the current fixed exchange rate, the Central Bank of Boblandia needs to buy domestic currency. In order to stop needing to purchase domestic currency, which policy option could it enact? a) Either increase nominal interest rates OR devalue the domestic currency b) Either increase nominal interest rates OR revalue the domestic currency. c) Either decrease nominal interest rates OR devalue the domestic currency d) Either decrease nominal interest rates OR revalue the domestic currency. e) It must adopt...
Consider this Central Bank balance sheet of a country with a fixed exchange rate. In order...
Consider this Central Bank balance sheet of a country with a
fixed exchange rate. In order to maintain the peg, the bank
intervenes in the foreign exchange market and sells $500 of
foreign bonds for domestic currency.
a) As a result of the intervention, has the domestic money
supply increased or decreased?
b) By how much? (no decimals)
c) What must the Central Bank do to sterilize this
intervention?
A. Buy $500 of foreign assets.
B. Sell $500 of foreign...
An increase in the money supply in a flexible exchange rate regime will cause: Select one:...
An increase in the money supply in a flexible exchange rate regime will cause: Select one: a. an increase in the exchange rate. b. no change in the exchange rate. c. a depreciation of the domestic currency. d. a shift of the IP curve.
Recently, the Central Bank of Mexico decreased the money supply, in consequence, interest rates increased. Using...
Recently, the Central Bank of Mexico decreased the money supply, in consequence, interest rates increased. Using an exchange rate graph, illustrate the likely effect (appreciates, depreciates, remains constant) of these two events on the Mexican peso exchange rate. Please include a graph
An increase in the Money Supply: Select one: O a. leads to a fall in prices...
An increase in the Money Supply: Select one: O a. leads to a fall in prices and an increase in consumption, shifting the AD to the left O b.leads to an increase in net exports, shifting the AS to the right O c. leads to a fall in interest rates and a consequent increase in investment, shifting the AD to the right O d. none of the above if a country that is a trade partner of ours falls into...
1.Appreciation of the domestic currency will a. increase domestic aggregate demand. b. decrease domestic aggregate supply....
1.Appreciation of the domestic currency will a. increase domestic aggregate demand. b. decrease domestic aggregate supply. c. decrease domestic aggregate demand, and possibly increase domestic aggregate supply. d. cause a deterioration in the trade balance, but have no effect on aggregate supply or demand. 2.In the current exchange rate arrangements of IMF members, a. a substantial number of countries do not have a freely floating exchange rate. b. the European Union countries fix their exchange rates against the US dollar....
5. a. Economists sometimes refer to the attempt by countries to fix their exchange rates, control...
5. a. Economists sometimes refer to the attempt by countries to fix their exchange rates, control their money supplies, and operate with open capital accounts in their balance of payments (that is, to have no restrictions on capital movements) as the "impossible trinity" of international macroeconomics. Based on what you have learned so far, would you agree that this combination of policies is impossible to achieve? Explain. b. Use three of the models you have studied (the fixed exchange rate,...
1. What is the short-run effect on the exchange rate of an increase in domestic real...
1. What is the short-run effect on the exchange rate of an increase in domestic real GNP, given expectations about future exchange rates? A.Money demand increases, the domestic interest rate increases, and the domestic currency depreciates. B.Money demand increases, the domestic interest rate increases, and the domestic currency appreciates. C.Money demand decreases, the domestic interest rate decreases, and the domestic currency appreciates. D.Money demand decreases, the domestic interest rate decreases, and the domestic currency depreciates. 2. In our discussion of...
The sum of currency and bank deposits at the central bank is called: a. the money supply. b. domestic assets. c. the monetary base. d. fractional reserves. Official intervention in the foreign exchange market to defend a fixed exchange rate when the value of the country's currency is under downward pressure causes a. international reserve holdings to rise. b. a downward pressure on the country's interest rates. c.an increase in the liabilities of the central bank. d. the domestic money...
6) Using money supply-money demand and the interest rate parity relationship, show how the central bank can maintain fixed exchange rates in the face of changes in output. 7) Using the DD-AA model under fixed exchange rates, show the effects of monetary policy. What are the main results? 8) Using the DD-AA model under fixed exchange rates, show the effects of fiscal policy. What are the main results? 9) Using the DD-AA model under fixed exchange rates, show the effects...
27. At the current fixed exchange rate, the Central Bank of Boblandia needs to buy domestic currency. In order to stop needing to purchase domestic currency, which policy option could it enact? a) Either increase nominal interest rates OR devalue the domestic currency b) Either increase nominal interest rates OR revalue the domestic currency. c) Either decrease nominal interest rates OR devalue the domestic currency d) Either decrease nominal interest rates OR revalue the domestic currency. e) It must adopt...
Consider this Central Bank balance sheet of a country with a
fixed exchange rate. In order to maintain the peg, the bank
intervenes in the foreign exchange market and sells $500 of
foreign bonds for domestic currency.
a) As a result of the intervention, has the domestic money
supply increased or decreased?
b) By how much? (no decimals)
c) What must the Central Bank do to sterilize this
intervention?
A. Buy $500 of foreign assets.
B. Sell $500 of foreign...
An increase in the Money Supply: Select one: O a. leads to a fall in prices and an increase in consumption, shifting the AD to the left O b.leads to an increase in net exports, shifting the AS to the right O c. leads to a fall in interest rates and a consequent increase in investment, shifting the AD to the right O d. none of the above if a country that is a trade partner of ours falls into...
Most questions answered within 3 hours.
-
What are the main components of the fermentation process and
give an explanation of each? Include...
asked 11 minutes ago -
Explain which types of cells in the body (belonging to which
organs, etc.) are sensitive to...
asked 15 minutes ago -
A single cable supports an 703-kg elevator car. What is the
tension in the cable when...
asked 17 minutes ago -
among the three different ways to link CSS specifications to an
HTML document (inline CSS, document...
asked 29 minutes ago -
(1) Write the net ionic equation for the reaction that occurs
when equal volumes of 0.191...
asked 56 minutes ago -
On the night of April 18, 1775, a signal was to be sent from the
Old...
asked 39 minutes ago -
For each of the following strong base solutions, determine
[OH−],[H3O+], pH, and pOH 4.8 x 10^-4...
asked 34 minutes ago -
The magnitude of the electric field inside a capacitor is 6.6 x
106 N/C. What is...
asked 34 minutes ago -
Organizations may have only a few products or many products in a
product line. Consider Campbell...
asked 47 minutes ago -
could you please help me to explain the nmr splitting
integration and chemical shift and assignment...
asked 43 minutes ago -
A
29.0 cm diameter coil consists of 23 turns of cylindrical copper
wire 2.00 mm in...
asked 49 minutes ago -
Q1
Two of your friends each received the results of their
first midterm exam this term....
asked 1 hour ago