Under a fiXed Exchange Rate Regime, Which of the Following

question 26

Multiple Choice

Under a fixed exchange rate regime, which of the following statements will be true?

• A) The central bank has an infinite reserve of foreign currencies to use to maintain the value of the exchange rate.
• B) There is a limit to the amount of domestic currency that the central bank can purchase to
• C) Since the exchange rate is fixed, the currency is not open to a speculative attack.
• D) The government and the central bank do not intervene in the foreign exchange market.

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