If a Country Sets a Pegged Exchange Rate That Is

question 213

Multiple Choice

If a country sets a pegged exchange rate that is below the equilibrium exchange rate, how can the country maintain the peg?

• A)by purchasing surplus domestic currency at the pegged rate
• B)by selling surplus domestic currency at the pegged rate
• C)by purchasing surplus domestic currency at the equilibrium exchange rate
• D)by decreasing the pegged exchange rate
• E)by decreasing the supply of domestic currency

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