How Does a Country That Introduces a Currency Board Make

question 21

Multiple Choice

How does a country that introduces a currency board make its commitment to converting its domestic currency on demand into another currency at a fixed exchange rate credible?

• A)By borrowing funds from the International Monetary Fund and the World Bank
• B)By maintaining a trade surplus with foreign countries
• C)By holding foreign currency reserves equal at the fixed exchange rate to at least 100 percent of the domestic currency issued
• D)By importing more goods from foreign countries than it exports
• E)By printing foreign currencies

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Definitions:

Obtained Value

The actual value measured or computed from a data set or experiment, often compared against a theoretic or critical value in hypothesis testing.

Population Standard Deviation

The population standard deviation is a measure of the dispersion or spread of a set of values within a population, quantifying how much the values differ from the population mean.

Square Root

A value that, when multiplied by itself, gives the original number, representing the inverse operation of squaring.

Population

The total set of individuals, items, or data from which samples can be drawn for statistical analysis.