Under a fiXed Exchange Rate Regime, When Will the Central

question 54

Multiple Choice

Under a fixed exchange rate regime, when will the central bank be required to purchase the domestic currency to maintain the exchange rate?

• A) When there is an excess demand for the domestic currency.
• B) When there is an excess supply of the foreign currency.
• C) When there is an excess supply of the domestic currency.
• D) When there is a shortage of the domestic currency.

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