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If a Nation Wants to Maintain a Constant Exchange Rate

Question 80

Multiple Choice

If a nation wants to maintain a constant exchange rate at a time when supply and demand are causing the exchange rate of its currency to appreciate,what action might the nation take?


A) reduce taxes and run a budget deficit to push domestic interest rates up
B) decrease its tariffs and/or eliminate restrictive quotas
C) shift to a more contractionary monetary policy
D) restrict the export of oil and other natural resources

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