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What government should do in order to maintain the fixed exchange and to solve the capital movement? Exercise 4 (6 points) Using the FOREX exchange

What government should do in order to maintain the fixed exchange and to solve the capital movement?

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Exercise 4 (6 points) Using the FOREX exchange rate market, applied to home country of Canada, (a) analyze the situation in which a government imposes a fixed exchange rate (the home currency is undervalued). Explain thoroughly. Also, where the capital tends to move? and (b) determine what that government should do in order to maintain the fixed exchange and to solve the capital movement as you found above in part a)?. explain thoroughly

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