Under a System of Fixed Exchange Rates, Other Things Equal

Multiple Choice

Under a system of fixed exchange rates, other things equal, if the par value of the fixed exchange rate is overvalued, then its central bank's effort to prevent the currency from ______ will lead to a (an) ______.

A) depreciating, increase in international reserves
B) depreciating, decrease in international reserves
C) appreciating, increase in international reserves
D) appreciating, decrease in international reserves