If an Economy Is Following a fiXed Exchange Rate Regime

question 30

Multiple Choice

If an economy is following a fixed exchange rate regime, its central bank's foreign currency reserves will increase when _____.

• A) there is an excess supply of its currency in the foreign exchange market
• B) there is an excess demand for its currency in the foreign exchange market
• C) its imports are equal to its exports
• D) its economy is experiencing low inflation

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