A fixed exchange rate is an exchange rate whose value:
A. reflects the comparative advantage of the home country versus other foreign countries.
B. is established annually by the International Monetary Fund.
C. varies according to supply and demand for the currency in the foreign exchange market.
D. is set by official government policy.
Answer: D
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The Mexican demand for American goods leads to the demand for:
A. U.S. dollars and the supply of Mexican pesos on the foreign exchange market. B. U.S. dollars and the supply of U.S. dollars on the foreign exchange market. C. Mexican pesos and the supply of U.S. dollars on the foreign exchange market. D. U.S. dollars and Mexican pesos on the foreign exchange market.