Under a fixed exchange rate system,if the British pound is undervalued,the British monetary authorities must

Question

Quizplus · Accepted Answer

If the British pound is undervalued, it means that it is weaker than the level that the monetary authorities believe it should be, and they would want to strengthen it to bring it to the desired level. To achieve this, they would need to sell pounds and buy dollars, which increases demand for the pound and reduces supply, thereby increasing its value.

Under a Fixed Exchange Rate System,if the British Pound Is