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 exceed exports
D) Decrease the supply of foreign currency when imports exceed exports

Question

Quizplus · Accepted Answer

Exchange stabilization funds are used to stabilize a country's currency by increasing the supply of foreign currency when there is a deficit in the balance of payments, such as when imports exceed exports.

A Main Purpose of Exchange Stabilization Funds Is To