If the central bank pegs the exchange rate below its free-market equilibrium level, there will be an)
Of/for foreign exchange and the central bank will foreign currency.

Question

Quizplus · Accepted Answer

When the central bank pegs the exchange rate below the free-market equilibrium, it creates excess demand for foreign currency. To maintain the peg, the central bank must sell foreign currency from its reserves.

If the Central Bank Pegs the Exchange Rate Below Its