When Countries Seek to Maintain Fixed Exchange Rates Through Intervention

question 28

Multiple Choice

When countries seek to maintain fixed exchange rates through intervention, their governments or central banks

• A) rarely have to intervene in currency markets because the exchange rate is fixed.
• B) can always rely on foreign governments or central banks to intervene in currency markets when necessary.
• C) must buy domestic currency when foreign demand for their currency increases.
• D) must sell domestic currency when foreign demand for their currency increases.

---

Definitions:

Irrational Belief

An unfounded or unreasonable belief that is maintained despite evidence to the contrary, often leading to emotional distress or behavior problems.

Nervous Apprehension

A feeling of fear or anxiety about something that might happen or a situation.

Dopamine

A neurotransmitter involved in controlling movement and the reward and pleasure centers of the brain.

Antipsychotic Drugs

medications used to treat symptoms of psychosis, such as delusions, hallucinations, and disorders like schizophrenia.