Which of the Following Statements Is True of Pegged Exchange

question 95

Multiple Choice

Which of the following statements is true of pegged exchange rates?

• A) A pegged exchange rate allows a country's currency to be determined by market forces.
• B) A pegged exchange rate weakens the monetary discipline of a country.
• C) Pegged exchange rates are popular among many of the world's smaller nations.
• D) Adopting a pegged exchange rate regime increases inflationary pressures in a country.

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Definitions:

Average Fixed Cost

The fixed costs of production divided by the quantity of output produced; decreases as production increases.

Average Variable Cost

The per unit cost of variable inputs divided by the total quantity of output produced, reflecting the variable cost of production.

Marginal Revenue

The additional income generated by increasing product sales by one unit.

Marginal Cost

The expense associated with manufacturing an extra unit of a product or service.