The figure given below depicts the foreign exchange market for British pounds traded for U.S. dollars.Figure 22.2

-When an exchange rate is established as a fixed peg, active intervention may be required to maintain the target-pegged rate.

Question

The figure given below depicts the foreign exchange market for British pounds traded for U.S. dollars.Figure 22.2
 
-When an exchange rate is established as a fixed peg, active intervention may be required to maintain the target-pegged rate.

Quizplus · Accepted Answer

Active intervention is often required to maintain a fixed-pegged exchange rate, as the government or central bank will need to sell or buy their own currency in order to ensure that the exchange rate stays at the predetermined level.

The Figure Given Below Depicts the Foreign Exchange Market for British