An exchange rate can be maintained only as long as:
A) the country's central bank reserves are available to support currency intervention in the foreign exchange market.
B) the country's central bank can increase the domestic money supply.
C) the country's government increases debt financing.
D) none of the above.

Question

Quizplus · Accepted Answer

An exchange rate can be maintained as long as the country's central bank has sufficient reserves to intervene in the foreign exchange market to support the currency.

An Exchange Rate Can Be Maintained Only as Long As