613 #
© 2014 Pearson Canada Inc.#
Under a fixed exchange rate regime, if a country has an ____ exchange rate, then its
central bank's attempt to keep its currency from depreciating will result in a ____ of
international reserves.
A) undervalued; gain
B) undervalued; loss
C) overvalued; gain
D) overvalued; loss
Answer: D
Diff: 2 Type: MC Page Ref: 527 - 528
Skill: Recall
Objective List: 20.3 Summarize the arguments for and against capital controls
Under a fixed exchange rate regime, if a country has an undervalued exchange rate, then its
central bank's attempt to keep its currency from ____ will result in a ____ of
international reserves.
A) depreciating; gain
B) depreciating; loss
C) appreciating; gain
D) appreciating; loss
Answer: C
Diff: 2 Type: MC Page Ref: 527 - 528
Skill: Recall
Objective List: 20.3 Summarize the arguments for and against capital controls
Under a fixed exchange rate regime, if a country has an ____ exchange rate, then its
central bank's attempt to keep its currency from appreciating will result in a ____ of
international reserves.
A) undervalued; gain
B) undervalued; loss
C) overvalued; gain
D) overvalued; loss
Answer: A
Diff: 2 Type: MC Page Ref: 527 - 528
Skill: Recall
Objective List: 20.3 Summarize the arguments for and against capital controls
Under a fixed exchange rate regime, if a country's central bank runs out of international
reserves, it cannot keep its currency from ____.
A) depreciating
B) appreciating
C) deflating
D) inflating
Answer: A
Diff: 2 Type: MC Page Ref: 527 - 528
Skill: Recall
Objective List: 20.3 Summarize the arguments for and against capital controls