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Suppose that the government of the UK is committed to a policy of keeping the exchange rate for the Pound sterling against the US Dollar at or very near a particular level. At the same time, suppose that the UK has a large balance of payments deficit. Which of the following measures would you expect the government and the central bank of the UK to be pursuing? A. Raising interest rates, buying foreign currencies, selling the Pound sterling. B. Raising interest rates, selling foreign currencies, buying the Pound sterling. C. Reducing interest rates, selling foreign currencies, buying the Pound sterling. D. Reducing interest rates, buying foreign currencies, selling the Pound sterling. |