Under an Exchange-Rate Targeting Rule for Monetary Policy,a Crawling Peg

question 96

Multiple Choice

Under an exchange-rate targeting rule for monetary policy,a crawling peg

• A)fixes the value of the domestic currency to a commodity such as gold.
• B)fixes the value of the domestic currency to that of a large,low-inflation country.
• C)allows the domestic currency to depreciate at a steady rate so that inflation in the pegging country can be higher than that of the anchor country.
• D)allows the domestic currency to depreciate at a steady rate so that inflation in the pegging country can be lower than that of the anchor country.

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Definitions:

Accumulated Cash

The total amount of cash that a company has generated and saved over its history, minus any cash payments or dividends made to shareholders.

Leased Asset

An asset that is rented under a contract where the lessee (user) has the right to use the asset in exchange for regular payments to the lessor (owner).

Long-Term Asset

Assets that are expected to provide economic benefits over a period longer than one year, such as buildings, machinery, and land.

Intangible Nature

The quality of being unable to be touched or grasped physically, often used to describe assets that do not have physical substance but are valuable to a business, like copyrights or goodwill.