Suppose that a country's government keeps the exchange rate between two or more currencies constant over time. This policy is known as a(n)

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A fixed exchange rate policy involves a government or central bank maintaining a constant exchange rate between two or more currencies by buying or selling its own currency in foreign exchange markets. This is in contrast to a floating exchange rate policy where exchange rates are determined by market forces of supply and demand. A managed floating exchange rate policy involves some government intervention to influence exchange rates, but is still not a fixed exchange rate policy. A laissez-faire exchange rate policy would involve no government intervention or regulation in exchange rates, which is not the case when exchange rates are fixed. An interventionist exchange rate policy implies active government intervention in exchange rates, but it is not necessarily the same as a fixed exchange rate policy.

Suppose That a Country's Government Keeps the Exchange Rate Between