Under a Fixed Exchange Rate System, the Central Bank of a Country

question 20

Multiple Choice

Under a fixed exchange rate system, the central bank of a country experiencing a balance of payments surplus will:

• A) increase the supply of dollars to prevent currency depreciation.
• B) increase the demand for dollars to prevent currency depreciation.
• C) increase the supply of dollars to prevent a currency appreciation.
• D) increase the demand for dollars to prevent a currency appreciation.

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Definitions:

FRCP 26(a)(1)

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