If a country with a fixed exchange rate tries to raise its money stock it will:

Question

Quizplus · Accepted Answer

When a country with a fixed exchange rate tries to increase its money stock, its central bank will likely end up losing international reserves as it intervenes in the foreign exchange market to maintain the fixed rate. This intervention can lead to a situation where the increased money stock is offset by the loss of reserves, effectively causing the money stock to return to its initial level. Additionally, the process may involve the central bank's operations with domestic government bonds as part of its monetary policy actions.

If a Country with a Fixed Exchange Rate Tries to Raise