To keep the exchange rate constant, an increase in the demand for a country's currency should be
matched by a corresponding increase in supply to be administered by the government.

Question

Quizplus · Accepted Answer

This is known as an "interventionist" approach to exchange rate management, where the government uses its reserves to buy or sell its own currency in order to maintain a stable exchange rate.

To Keep the Exchange Rate Constant, an Increase in the Demand