The pressures on the foreign exchange market are such that they cause the British pound to depreciate against the US dollar. If the British pound tries to maintain the exchange rate against the US dollar, which of the following pressures will stop the pressure to devalue the British pound? a. Britain has to sell pounds to buy dollars b. Britain will have to increase its money supply to create a domestic product c. Britain must buy pounds and sell dollars d. Britain should do nothing as a fixed interest rate does not change

The pressures on the foreign exchange market are such that they cause the British pound to depreciate against the US dollar. If the British pound tries to maintain the exchange rate against the US dollar, which of the following pressures will stop the pressure to devalue the British pound? a. Britain has to sell pounds to buy dollars b. Britain will have to increase its money supply to create a domestic product c. Britain must buy pounds and sell dollars d. Britain should do nothing as a fixed interest rate does not change

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter6: Government Influence On Exchange Rates

Section: Chapter Questions

Problem 3BIC

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