Multiple Choice
The government believes that the current exchange rate is its long- term equilibrium. However, short- term leftward shifts in demand and rightward shifts in supply are causing the exchange rate to fall below this level. Which of the following are actions the government could take?
A) Borrow from abroad
B) Use reserves
C) Lower interest rates
D) Raise interest rates
E) A, B and D F) B, C and D
Correct Answer:
Verified
Correct Answer:
Verified
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