NO.PZ2023071902000030
问题如下：
QuestionA developing country, which maintains a fixed exchange rate with the US
dollar, is experiencing an economic slowdown, and its inflation rate
falls below the inflation level in the United States. The most likely
consequence of the developing country's efforts to maintain the fixed
exchange rate target is that its:
选项：
A.foreign exchange reserves will fall
B.short-term interest rates will fall.
C.money supply will fall
解释：
Solution
- Incorrect. With a decline in economic activity and domestic inflation, the developing country's currency would tend to appreciate against the dollar. To uphold the fixed exchange rate target, the country's monetary authority would need to buy foreign exchange reserves and sell its own currency. This action will increase the domestic money supply, decrease short-term interest rates, and boost foreign exchange reserves.
- Correct. With a decline in economic activity and domestic inflation, the developing country's currency would tend to appreciate against the dollar. To maintain the fixed exchange rate target, the country's monetary authority would need to buy foreign exchange reserves and sell its own currency. As a result, the domestic money supply will increase, leading to a decrease in short-term interest rates, and foreign exchange reserves will rise.
- Incorrect. With a decline in economic activity and domestic inflation, the developing country's currency would tend to appreciate against the dollar. To preserve the fixed exchange rate target, the country's monetary authority would need to buy foreign exchange reserves and sell its own currency. This action will increase the domestic money supply, decrease short-term interest rates, and boost foreign exchange reserves.
• describe qualities of effective central banks; contrast their use of inflation, interest rate, and exchange rate targeting in expansionary or contractionary monetary policy; and describe the limitations of monetary policy
可以比较一下AB么，外汇储备不会有影响么
