Multiple Choice
Suppose that Econland adopts a fixed exchange-rate system and pegs the value of its peso to the U.S. dollar. If people's demand for pesos increases in the foreign exchange markets, then
Econland's foreign-exchange reserves will
A) increase.
B) decrease.
C) stay the same.
D) equal the trade balance.
Correct Answer:
Verified
Correct Answer:
Verified
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