In Hong Kong, the Monetary Authority Can Only Increase the Monetary

question 105

Multiple Choice

In Hong Kong, the monetary authority can only increase the monetary base if they accumulate more U.S. dollars because:

• A) the currency of Hong Kong is the U.S. dollar.
• B) the monetary authority in Hong Kong operates a currency board where its sole objective is to fix the exchange rate between its currency and the U.S. dollar.
• C) the IMF required Hong Kong to peg its currency to the U.S. dollar in order to obtain a loan.
• D) Hong Kong has received substantial funding from the U.S. Treasury and the loans were conditional on maintaining the value of the Hong Kong currency.

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