Suppose Country a Pegs Its Nominal Exchange Rate to Country

question 20

Multiple Choice

Suppose country A pegs its nominal exchange rate to country B and that country A has a lower inflation rate than country B.In this situation,country A will experience

• A)a real depreciation.
• B)a better trade position.
• C)a reduction in the real exchange rate.
• D)all of the above
• E) none of the above

---

Definitions:

Programmed Decisions

Decisions that are routine and repetitive, which can be addressed through established processes.

Company Policies

Established guidelines and rules that dictate how various aspects of business should be conducted within an organization.

Rate Alternatives

A step in decision-making processes where different options are evaluated based on selected criteria to determine the best choice.

Decision Criteria

The standards or benchmarks that guide choices in the decision-making process.