Question

In a fixed exchange rate​ system, how do countries address the problem of currency market pressures that threaten to lower or raise the value of their​ currency? A. If demand​ falls, then countries must increase demand by buying up the excess supply with domestic currency. B. If demand​ rises, countries must fill the excess demand for foreign currency by selling their reserves. C. If demand​ rises, then countries can adjust the value of the exchange rate to the desired level. D. A and B only.

Answer 1

Answer: D. A and B only

Explanation:

In a fix exchange rate, the country can address problem of currency market pressure that threaten yo lower or raise the value of its currency by this under listed measures;

1. if demand falls, then countries must increase demand by buying up the excess supply with domestic currency

2. if demand rises, countries must fill the excess demand for foreign currency by selling their reserves.