When Faced with a Continual Excess Demand for Foreign Exchange

question 26

Multiple Choice

When faced with a continual excess demand for foreign exchange, which of the following options can the government choose to eliminate the disequilibrium situation?

• A)increase the peg or devalue
• B)engage in fiscal policy and raise the country's income level
• C)engage in monetary policy and lower interest rates
• D)increase the inflation rate
• E)decrease the peg or revalue