Asked by Megan Campbell on Jul 26, 2024
Verified
To maintain a fixed exchange rate, the government can use the following tools, except
A) currency market intervention.
B) controlling the flow of trade through various barriers.
C) rationing of foreign exchange.
D) keeping its level of international reserves strictly fixed.
Fixed Exchange Rate
A system where the value of a currency is set to a specific rate against another currency or basket of currencies.
Currency Market Intervention
Involves central banks or other monetary authorities buying or selling currencies to influence exchange rates.
Foreign Exchange
Foreign Exchange involves the trading of currencies against one another, facilitating international trade and investment.
- Comprehend the instruments that governments utilize to uphold stable exchange rates.
Verified Answer
Learning Objectives
- Comprehend the instruments that governments utilize to uphold stable exchange rates.
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