Westerlands and Crownlands are two countries that trade with each other and no other countries. Assume that Westerlands' currency is pegged to Crownlands' currency. Meanwhile, due to inflationary pressures, the central bank of Westerlands wishes to decrease the money supply. Which statement is correct - assume that initially (before conducting the monetary policy), Westerlands central bank does not have to intervene in Foreign Exchange Market:
a. To achieve this, Westerlands' central bank can decrease money supply and sell its foreign reserves in foreign exchange markets.
b. Since the exchange rate is fixed, Westerlands' central bank cannot perform this monetary policy.
c. Crownlands' central bank can decrease its money supply in order to decrease demand for Westerlands' currency.
d. None of the above.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Westerlands and Crownlands are two countries that trade with each other and no other countries. Assume that Westerlands' currency is pegged ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers
You Might be Interested in
Cashen Co. paid $2,400,000 to acquire all of the common stock of Janex Corp. on January 1, 2012. Janex's reported earnings for 2012 totaled $432,000, and it paid $120,000 in dividends during the year.
Answers (1)
How could an entrepreneur demonstrate critical thinking and problem solving while setting up his or her type of business?
Answers (1)
Why can only the house of representatives introduce tax bills?
Answers (1)
Which of the following is the one key interest rate to focus on when trying to forecast interest rate trends in the future? a. Discount rateb. Mortgage ratec. Prime rated. Federal funds rate
Answers (1)
The marketing manager of Griffin Corporation has determined that a market exists for a telephone with a sales price of $36 per unit.
Answers (1)
New Questions in Business
A small number of institutional investors are often able and motivated to bring direct shareholder pressure on a firm's management in an effort to reduce potential agency conflicts. a. True b. False:
Answers (1)
True or false: increasing the confidence level will lead to a wider margin of error.
Answers (1)
Both Bond Sam and Bond Dave have 6 percent coupons, make semiannual payments, and are priced at par value. Bond Sam has four years to maturity, whereas Bond Dave has 19 years to maturity. a.
Answers (1)
What role have public speeches served in ancient societies?
Answers (2)
What is the total annual value of goods and services produced in a country called? A. Gross Domestic Product B. Gross National Product C. Personal Disposable Income D. Gross National Income
Answers (1)