In the Bretton Woods system,if the U.S.increases its money supply,foreign central banks will have to intervene by ______ dollars and ______ foreign currencies to maintain a fixed exchange rate.
A) selling; selling
B) selling: buying
C) buying; selling
D) buying; buying

Question

Quizplus · Accepted Answer

If the U.S. increases its money supply, the value of the dollar will decrease, leading to a higher demand for foreign currencies. To maintain the fixed exchange rate, foreign central banks will have to sell their currencies (buying dollars) to prevent their currencies from appreciating too much.

In the Bretton Woods System,if the U