Suppose you peg your currency to the U.S. dollar. Now interest rates in the United States have increased. To maintain the fixed exchange rate, you can

Name: Suppose you peg your currency to the U.S. dollar. Now interest rates in the United States have increased. To maintain the fixed exchange rate, you can
Brand: Quizplus
Rating: 4.9 (47 reviews)

Question

Quizplus · Accepted Answer

To maintain the fixed exchange rate, the central bank needs to sell dollars in the foreign exchange market to reduce the supply of dollars and keep the exchange rate at the desired level.

Suppose You Peg Your Currency to the U