Which of the following is NOT a characteristic of a target zone regime?
A) The central bank will exchange currencies for gold or dollars on demand.
B) The central bank sells its currency if the daily market-determined exchange rate approaches the upper bound of the target.
C) The central bank buys its currency if the daily market-determined exchange rate approaches the lower bound of the target.
D) Many central banks do not have enough foreign currency reserves to withstand a speculative attack against their currency.
Correct Answer:
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