To Fix the Foreign Currency Price of Domestic Currency Below

question 40

Multiple Choice

To fix the foreign currency price of domestic currency below the free market equilibrium rate, a government must:

• A)sell both its own currency and foreign exchange.
• B)buy its own currency and sell foreign exchange.
• C)buy both its own currency and foreign exchange.
• D)sell its own currency and buy foreign exchange.
• E)revalue its own currency.

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Definitions:

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