What might a central bank do to stop a fall in the value of its country's currency?
A.
raise interest rates
B.
reduce taxes on imports
C.
remove controls on currency outflows
D.
sell their currency on the foreign exchange market
Exam No:0455_m25_qp_12 Year:2025 Question No:29
Answer:
A
Knowledge points:
6.3.1 definition of foreign exchange rate:Floating and fixed systems.
6.3.2 determination of foreign exchange rate in foreign exchange market :The demand for and supply of a currency in the foreign exchange market and the determination of the equilibrium foreign exchange rate.
6.3.3 causes of foreign exchange rate fluctuations:Including changes in demand for exports and imports, changes in the rate of interest, speculation, and the entry or departure of MNCs.
6.3.4 consequences of foreign exchange rate fluctuations:The effects of foreign exchange rate fluctuations on export and import prices and spending on imports and exports via the PED.
6.3.5 floating and fixed foreign exchange rates:The difference between, and the advantages and disadvantages of, a floating foreign exchange rate and a fixed foreign exchange rate system.
Solution:
Download APP for more features
1. Tons of answers.
2. Smarter Al tools enhance your learning journey.
IOS
Download
Download
Android
Download
Download
Google Play
Download
Download
