If total inflows of foreign exchange exceed total outflows of foreign exchange at the current fixed exchange rate, the government would need to intervene and:
A) buy foreign exchange to maintain the exchange rate.
B) sell foreign exchange to maintain the exchange rate.
C) devalue the country's currency.
D) conduct an expansionary monetary policy.
E) reduce trade flows.

Question

Quizplus · Accepted Answer

If total inflows of foreign exchange exceed total outflows of foreign exchange at the current fixed exchange rate, the government would need to intervene and buy foreign exchange to maintain the exchange rate.

If Total Inflows of Foreign Exchange Exceed Total Outflows of Foreign