Question 36
MediumOriginal questionRead the two statements and choose the correct option.
I. A fixed rate needs the central bank to hold large foreign exchange reserves.
II. Under a fixed rate, the currency's value never changes.
Show the answer and explanation
CorrectNot quiteAnswer A
Correct answer: A
Explanation
Reserves are needed to buy or sell currency at the fixed rate. I is true.
The authority can devalue or revalue. II is false.
- Concept
- Demerits of a fixed rate
- Typical timeTypical
- 70 s
- Your timeYours
- —
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