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Under a Fixed Exchange-Rate System, If the Equilibrium Exchange Rate

question 233

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Under a fixed exchange-rate system, if the equilibrium exchange rate is continually and substantially below the fixed rate, that means that the local currency is overvalued relative to equilibrium. In this case, which of the following will not be a result of the central bank's actions to maintain the peg?


Definitions:

Military Service

Employment in the armed forces of a country, including duties in defense, operations, and possibly combat, either as a voluntary career or through conscription.

Border States

Refers to the slave states that did not secede from the Union during the American Civil War, namely Delaware, Maryland, Kentucky, and Missouri.

Emancipation Proclamation

A historic executive order issued by President Abraham Lincoln in 1863 that declared the freedom of all enslaved people in Confederate states.

Officially Take Effect

When something is said to officially take effect, it means it begins to legally or formally be applied or enforced from a specified moment.

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