If a Country Fixes the Exchange Rate for Its Currency

question 90

Multiple Choice

If a country fixes the exchange rate for its currency relative to other currencies,and if the official exchange rate is overvalued relative to its fundamental value,then

• A) the most likely outcome is a depreciation of its currency.
• B) the most likely outcome is a devaluation of its currency.
• C) the most likely outcome is a revaluation of its currency.
• D) it will likely be able to indefinitely support its value by using its international reserves to buy its currency on the foreign exchange market.
• E) it can ease its monetary policy to increase the fundamental value of its currency and eliminate the overvalued status.

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Definitions:

Minority Groups

Demographic groups that are smaller in number within a larger community and often have different cultural, ethnic, or racial characteristics.

Leadership Approach

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Multicultural Organisations

Multicultural organisations are those that recognize, incorporate, and benefit from a diverse range of cultures, perspectives, and practices within their workforce and customer base.

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