When a Country Tries to Hold the Value of Its

question 1

Multiple Choice

When a country tries to hold the value of its currency within some range against an important reference currency such as the U.S. dollar without adopting a formal pegged rate, it is referred to as a

• A) gold standard.
• B) pegged float.
• C) dirty float.
• D) currency peg.

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Definitions:

Equilibrium Price

The market valuation where the supply of products equals the demand for products.

Gains From Trade

The benefits that parties obtain from engaging in voluntary trading, often leading to an increase in overall welfare and efficiencies.

Consumer Surplus

The mismatch between the aggregate amount consumers intend and can afford to pay for a product or service and the aggregate amount they really pay.

Producer Surplus

The difference between the amount a producer is willing to accept for a good versus what they actually receive in the market.