A government can control the value of its currency by
A) increasing or decreasing the supply of money.
B) adjusting interest rates.
C) avoiding the practice of arbitrage.
D) All of these are true.

Question

Quizplus · Accepted Answer

All of these options are true ways that a government can control the value of its currency. By increasing or decreasing the supply of money, a government can influence the exchange rate of its currency. By adjusting interest rates, a government can also control the flow of money in and out of the country, affecting the exchange rate. Avoiding the practice of arbitrage, where investors take advantage of price differences in different markets, can also help stabilize the currency's value.

A Government Can Control the Value of Its Currency by