How Does a Country Maintain a Fixed Exchange Rate

question 133

Multiple Choice

How does a country maintain a fixed exchange rate?

• A) By intervening in the foreign exchange markets and buying or selling currency as needed to achieve the desired exchange rate.
• B) By forbidding foreign exchange markets to trade currency at anything other than the official exchange rate.
• C) By setting domestic interest rates to achieve purchasing power parity as the desired exchange rate.
• D) By intervening in import and export markets to achieve the desired current account and exchange rate.

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