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When a Country Fixes the Price of Foreign Exchange (In

Question 96

Multiple Choice

When a country fixes the price of foreign exchange (in terms of the domestic currency) below equilibrium, which of the following will result?


A) A black market will develop for foreign exchange.
B) Residents of that country can buy as much foreign currency as they want.
C) There will be a surplus of foreign exchange.
D) A depreciation of the currency will restore equilibrium in the foreign exchange market.

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