If Bolivia decides to fix their exchange rate but does not have enough foreign exchange (dollars) to intervene in the foreign exchange market, then they might institute a system of:
A) exchange controls.
B) white markets.
C) nominal markets.
D) an MTN.
E) all of the above

Question

Quizplus · Accepted Answer

If Bolivia wants to fix their exchange rate but does not have enough foreign exchange reserves to intervene in the foreign exchange market, they might choose to institute a system of exchange controls. This would involve restricting or limiting the amount of foreign currency that can be bought or sold within the country, as well as imposing penalties for those who violate these restrictions. This would help them to maintain the fixed exchange rate without having to rely on intervention in the currency markets. The other options (B, C, D, and E) are not relevant in this context.

If Bolivia Decides to Fix Their Exchange Rate but Does