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When Maintaining a Pegged Exchange Rate Fixed Exchange Rate), If

Question 6

Multiple Choice

When maintaining a pegged exchange rate fixed exchange rate) , if the central bank runs out of foreign currency reserves, then:


A) it can always print more of domestic currency.
B) it can back the money supply by buying domestic assets.
C) it can sell its own currency and buy foreign currency reserves.
D) it must allow the domestic currency to float.

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