Refer to Figure 15.3 for the Following Questions

question 88

Multiple Choice

Refer to Figure 15.3 for the following questions.
Figure 15.3

-Assume that the Thai government wants to maintain an exchange rate of 0.04 baht per United States (US) dollar, as shown in Figure 15.3. If the Thai central bank pursues a contractionary monetary policy, how will that affect the number of baht the central bank must buy or sell to maintain the peg at 0.04 baht per US dollar?

• A)They must purchase more than 100 million baht per day with US dollars.
• B)They must purchase less than 100 million baht per day with US dollars.
• C)They must purchase exactly 100 million baht per day with US dollars.
• D)They do not have to do anything.

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