Suppose the Reserve Bank Wants to Fix the Australian Dollar/Philippine

question 12

Multiple Choice

Suppose the Reserve Bank wants to fix the Australian dollar/Philippine peso rate at 11 pesos per dollar under a fixed exchange rate policy. If the exchange rate falls to 10 pesos per Australian dollar, the Reserve Bank can

• A)attempt to freeze all sales of Australian dollars.
• B)buy Australian dollars.
• C)sell Australian dollars.
• D)Any of the above actions could take place.