_____ in the foreign exchange market may be a way of avoiding the macroeconomic consequences of an _____ exchange rate.
A) intervention, undervalued
B) sterilization, undervalued
C) intervention, overvalued
D) sterilization, overvalued
E) None of the above

Question

Quizplus · Accepted Answer

Intervention in the foreign exchange market, especially when dealing with an overvalued exchange rate, can help a country manage or mitigate potential negative macroeconomic impacts. This involves the country's central bank buying or selling its own currency to influence its value.

_____ in the Foreign Exchange Market May Be a Way