If a Government Wishes to Limit or Prohibit Fluctuations in Exchange

Multiple Choice

If a government wishes to limit or prohibit fluctuations in exchange rates, it will choose:

A) to fix, or peg, the value of its currency to some base currency over a sustained period.
B) to allow its currency to rise or fall in price, depending on a variety of supply and demand factors.
C) to suspend purchases and sales of its currency.
D) to allow the rate to be set by international banks.