To Maintain a fiXed Exchange Rate Under a Shortage of FX

question 133

Multiple Choice

To maintain a fixed exchange rate under a shortage of FX reserves, the government has the following options, except

• A) encourage foreign investment inflows, and restrict foreign investment outflows.
• B) encourage imports, and discourage exports.
• C) impose exchange controls or capital controls.
• D) use monetary or fiscal policies to reduce domestic spending.

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Definitions:

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