1. What is the effect of a foreign exchange intervention on the money supply? How can a central bank offset this effect and still hope to influence exchange rate?
2. Which of the following statements about capital rationing is most correct?
A. Capital rationing occurs when a business does not have the capital necessary to fund all acceptable projects.
B. Capital rationing occurs when a business has more capital available than needed to fund all acceptable projects.
C. Under capital rationing, the typical approach is to accept all projects with negative NPVs.
D. Both a. and b. are correct.