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Under a fiXed Exchange Rate Regime, Which of the Following

Question 20

Multiple Choice

Under a fixed exchange rate regime, which of the following statements will be true?


A) The central bank has an infinite reserve of foreign currencies to use to maintain the value of the exchange rate.
B) There is a limit to the amount of domestic currency that the central bank can purchase to
C) Since the exchange rate is fixed, the currency is not open to a speculative attack.
D) The government and the central bank do not intervene in the foreign exchange market.

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