The government can affect the exchange rate by:
A) selecting the exchange rate regime
B) intervening in the foreign exchange market by buying and selling currencies
C) affecting, via monetary policy, the variables that determine the exchange rate
D) all of the given answers

Question

Quizplus · Accepted Answer

The government can influence the exchange rate through various means: by choosing the exchange rate regime (fixed, floating, or pegged), by directly intervening in the foreign exchange market (buying or selling currencies to influence their value), and by implementing monetary policies that affect economic variables (like interest rates) which in turn influence the exchange rate.

The Government Can Affect the Exchange Rate By