What Can a Country Introduce If It Wants to Commit

question 2

Multiple Choice

What can a country introduce if it wants to commit itself to converting its domestic currency on demand into another currency at a fixed exchange rate?

• A)A free-float exchange rate system
• B)A clean-float exchange rate system
• C)A pure-float exchange rate system
• D)A currency board
• E)A gold standard

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Definitions:

Trade

The exchange of goods or services between parties.

Adam Smith

An 18th-century Scottish economist and philosopher, often considered the father of modern economics, known for his theories on free markets.

1776

The year marked by the Declaration of Independence of the United States, symbolizing a significant historical event rather than an economic term.

Production Possibilities Frontier (PPF)

A curve depicting all maximum output possibilities for two goods, given a set of inputs.