Question: Under a fixed exchange rate system, a central bank's ability to move an overvalued domestic currency to its official fixed exchange rate is limited by

Under a fixed exchange rate system, a central bank's ability to move anovervalueddomestic currency to its official fixed exchange rate is limited by

  1. the amount of domestic currency it can create.
  2. the amount of official reserves (foreign currencies) it holds.
  3. the trade deficit.
  4. none of the above.

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