When faced with a continual excess demand for foreign exchange, which of the following options can the government choose to eliminate the disequilibrium situation? increase the peg or devalue engage in fiscal policy and raise the country's income level engage in monetary policy and lower interest rates increase the inflation rate decrease the peg or revalue
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This means that the government can adjust the exchange rate of its currency to make it cheaper relative to other currencies. By doing so, it can encourage more foreign exchange inflows and reduce the excess demand for foreign exchange. Show more…
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