If the Equilibrium Exchange Rate Is Below the Target Rate

question 33

Multiple Choice

If the equilibrium exchange rate is below the target rate, the government should: I. buy its domestic currency in foreign exchange markets.
II) engage in expansionary monetary policy.
III) restrict the purchase of the domestic currency by foreigners.

• A) I only
• B) II only
• C) III only
• D) I, II, and III

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