Refer to Figure 20.5 for the Following Questions

question 237

Multiple Choice

Refer to Figure 20.5 for the following questions.
Figure 20.5
-Assume that the Thai government wants to maintain an exchange rate of 0.04 baht per US dollar,as shown in Figure 20.5.If the Thai economy falls into recession,how will that affect the number of baht the central bank must buy or sell to maintain the peg at 0.04 baht per dollar?

• A) They must purchase more than 100 million baht per day with US dollars.
• B) They must purchase less than 100 million baht per day with US dollars.
• C) They must purchase exactly 100 million baht per day with US dollars.
• D) They do not have to do anything.

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