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Central banks control exchange rates by intervention. If a nation such as Japan wished to peg its market rate at a certain level, such as

Central banks control exchange rates by intervention. If a nation such as Japan wished to peg its market rate at a certain level, such as 100 = $1, what should it do if the actual market rate begins to depreciate to 125 = $1?

a It should increase its GDP to increase exports.
b It should purchase dollars with its own currency.
c It should sell dollars from its treasury and retire its own currency.
d It should petition the IMF for a rate change.

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