With exchange controls, a shortage of foreign exchange may require the government to:
A) devalue the currency.
B) adopt restrictive macroeconomic policies.
C) ration available foreign exchange among its competing uses.
D) All of the above.
E) None of the above

Question

Quizplus · Accepted Answer

In a situation with exchange controls and a shortage of foreign exchange, a government might devalue its currency to make its exports cheaper and imports more expensive, adopt restrictive macroeconomic policies to reduce the demand for foreign currency, and ration the available foreign exchange among different uses to ensure that critical imports can still be purchased.

With Exchange Controls, a Shortage of Foreign Exchange May Require