A fixed exchange rate can be maintained by a government as long as it has sufficient

Question

Quizplus · Accepted Answer

A fixed exchange rate can be maintained by a government as long as it has sufficient foreign reserves to buy or sell its own currency in the foreign exchange market. This allows the government to influence the exchange rate of its currency by buying or selling it as needed. Supplies of its own currency, gold and other precious metals, and tax revenues do not necessarily guarantee the ability to maintain a fixed exchange rate.

A Fixed Exchange Rate Can Be Maintained by a Government