Under the Fixed Rate Regime Foreign Countries Could Hold Their

question 117

Multiple Choice

Under the fixed rate regime foreign countries could hold their dollar exchange rates constant by

• A) using tight monetary policy.
• B) using expansionary fiscal policy.
• C) negotiating with the central bank of the United States.
• D) setting their domestic interest rate equal to the U.S. interest rate.
• E) holding their exchange rates constantly pegged to the euro and yen.

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