In a fixed exchange rate regime, the government Select one: a. establishes capital controls. b. establishes exchange rate controls. c. buys and sells currency through the central bank. d. expands the money supply.

You are given the exchange rate between the U.S. dollar and the Canadian dollar. You are also given the exchange rate between the U.S. dollar and the Mexican peso. What is the name given to the Canadian dollar per Mexican peso exchange rate derived from the information that was provided?  A.  Swap rate   B.  Depositary rate   C.  Forward rate   D.  London Interbank rate   E.  Cross-rate

D3) Finance Use covered interest rate parity (CIP) to show that a fixed exchange rate and free capital flows imply that a central bank cannot set the interest rate independently from the interest rate set by the reference currency's central bank.

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