Exchange Rates and the Balance of Payments (id: c0da69455)

本题目来源于试卷: Exchange Rates and the Balance of Payments，类别为 IB经济学

[单选题]
Which of the following is the most likelw s3gn0.jehsa8.xq:i 1:h u0 usc ;zuwy response for a cou q3e;2k,hke;o adc*tf+8vmi ontry with a fixed exchange rate experiencing a sharp fall in net expoe;f 8 q ka+,dvt;hik 3oemc*o2rts?

A. Higher interest rates
B. Higher growth
C. Higher inflation
D. Higher money supply


参考答案:  A


本题详细解析:

A

$\underset{‾}{\text{Explanation}}$:
A sharp fall in net exports would cause a depreciation of the currency. In order to maintain a fixed exchange rate, interest rates can be increased in order to revalue the currency by attracting inward portfolio investment.

Choices B and C are incorrect as a fall in net exports is deflationary (AD shifts left).

Choice D is incorrect as a higher money supply would cause a further depreciation by lowering interest rates, reducing inward portfolio investment, which is the opposite of what is needed in order to maintain the fixed exchange rate.

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