Why are governments, even when acting together, at a disadvantage when intervening in international currency markets?
Correct answer: D. The control only a small fraction of the money moving on such markets
- A. They can't use state funds to buy or sell currencies
- B. All of their movements are tightly regulated by the IMF
- C. Developing countries oppose the manipulation of markets by developed countries
- D. The control only a small fraction of the money moving on such markets
Explanation
Governments and central banks control only a small share of the enormous volume traded daily in global currency markets, so intervention may have limited and temporary effects. IMF regulation and opposition by developing countries are not the main constraint.
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