Which Is the Following Is True for Countries with Fixed

question 8

Multiple Choice

Which is the following is true for countries with fixed exchange rate regimes?

• A) Central banks of these courtiers are required to maintain exchange reserves to cover 100% of the existing domestic currency
• B) Centrals banks cannot use monetary policy to affect the economic fundamentals (such as inflation)
• C) These countries must use currency board
• D) The external value of the country's currency will simply depreciate to the level at which there is no excess supply of the country's currency

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