A main purpose of exchange stabilization funds is to
A) permit a country to overvalue its currency in the exchange markets.
B) permit a country to undervalue its currency in the exchange markets.
C) increase the supply of foreign currency when imports increase and exceed exports.
D) decrease the supply of foreign currency when imports increase and exceed exports.

Question

Quizplus · Accepted Answer

Exchange stabilization funds are used to stabilize a country's currency value by managing the supply of foreign currency, particularly to increase the supply when imports exceed exports, thereby preventing excessive fluctuations in exchange rates.

A Main Purpose of Exchange Stabilization Funds Is to