Using a fixed exchange rate to undervalue your currency:
A) will increase your exports.
B) will encourage capital flow to countries other than your own.
C) makes imports very expensive for your citizens.
D) All of these statements are true.

Question

Quizplus · Accepted Answer

Undervaluing a currency through a fixed exchange rate can make exports cheaper and more competitive, discourage capital inflow as investors seek better returns elsewhere, and make imports more expensive for domestic consumers.

Using a Fixed Exchange Rate to Undervalue Your Currency