When Maintaining a Pegged Exchange Rate Fixed Exchange Rate), If

question 38

Multiple Choice

When maintaining a pegged exchange rate fixed exchange rate) , if the central bank runs out of foreign currency reserves, then:

• A) it can always print more of domestic currency.
• B) it can back the money supply by buying domestic assets.
• C) it can sell its own currency and buy foreign currency reserves.
• D) it must allow the domestic currency to float.

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