Which of the Following Statements Is True About a Currency

question 9

Multiple Choice

Which of the following statements is true about a currency board system?

• A)Under a strict currency board system,interest rates adjust automatically based on the supply and demand of domestic currency.
• B)To convert domestic currency on demand into another currency,a currency board takes grants from the International Monetary Fund.
• C)This system is a true fixed exchange rate regime,because the domestic currency is fixed against other currencies.
• D)A currency board can issue additional domestic currency even when there are no foreign exchange reserves to back it.
• E)A currency board authorizes the government to print money and set interest rates.

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