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With Fixed Exchange Rates,assume That the Home Currency Becomes Undervalued

Question 34

Multiple Choice

With fixed exchange rates,assume that the home currency becomes undervalued.To maintain the fixed exchange rate,the home country's central bank must


A) purchase the currency,and as a result it loses international reserves
B) purchase the currency,and as a result it gains international reserves
C) sell the currency,and as a result it loses international reserves
D) sell the currency,and as a result it gains international reserves

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