6. If the value of the goods, services, and capital assets exported to foreigners is less than the value of the items imported, there is an excess supply of the country's currency on the foreign exchange market. When this happens, under a system of fixed exchange rates, the country must either

(a) devalue its currency or

(b) take action to reduce imports (for example, heighten its trade barriers), or

(c) pursue a restrictive macropolicy designed to increase interest rates and retard inflation. During the period from 1 944 to 1971, when most of the nations of the free world operated under a system of fixed exchange rates, corrective action taken to maintain fixed exchange rates was often in conflict with the goals of maximum freedom of exchange in international markets and the macropolicy objective of full employment.