For a Country to Successfully Maintain a Fixed Exchange Rate

question 53

Multiple Choice

For a country to successfully maintain a fixed exchange rate value of its currency relative to another currency (for example, as is done when currencies are unified or pegged) , it must

• A) maintain a relatively high rate of inflation.
• B) balance the government budget each year.
• C) give up the independence of its monetary policy.
• D) run a trade deficit.

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Definitions:

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