If a Country Has a Fixed Exchange Rate

question 156

Multiple Choice

If a country has a fixed exchange rate

• A)the equilibrium exchange rate in that market does not respond to changes in supply and demand for currency.
• B)central banks have more control over real GDP in the economy.
• C)central banks must buy and sell their holdings of currencies to maintain a given exchange rate.
• D)the exchange rate is allowed to fluctuate in response to changes in the supply and demand for currency.

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