Assume Policy Makers in a Fixed Exchange Rate Regime Decide

question 5

Multiple Choice

Assume policy makers in a fixed exchange rate regime decide to peg the exchange rate at a higher level.This is called

• A)a devaluation.
• B)a revaluation.
• C)a depreciation.
• D)an appreciation.

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Definitions:

Semiannually

Occurring or done twice a year, typically every six months.

Debt Investments

Investments in bonds or other forms of debt securities that provide the investor with interest income.

Bonds

Fixed income investments representing a loan made by an investor to a borrower, typically corporate or governmental, which pays periodic interest payments and returns the principal at maturity.

Currency Futures

Financial contracts to exchange a specified amount of a currency at a predetermined future date and price, used to hedge against or speculate on currency movements.