Under a System of Fixed Exchange Rates, a Nation Experiencing

question 1

Multiple Choice

Under a system of fixed exchange rates, a nation experiencing an excess of imports over exports can try to remedy this situation by:

• A) Adopting tariffs and quotas.
• B) Reducing its income from investments abroad.
• C) Applying an expansionary macroeconomic policy to drive prices up and interest rates down.
• D) Building up its reserves of foreign currencies and reserve balances with the International Monetary Fund.

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Definitions:

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