If a Country Wants to Keep Its Exchange Rate Fixed

question 228

Multiple Choice

If a country wants to keep its exchange rate fixed, it must

• A) allow its currency value to vary with market supply and demand in foreign exchange markets.
• B) be a member of the IMF.
• C) vary the amount of its national currency supplied at any given exchange rate in foreign exchange markets when necessary.
• D) eliminate its foreign exchange reserves.

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A situation where actions do not result in any significant repercussions or penalties.

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