If a Country Sets a Pegged Exchange Rate That Is

question 107

Multiple Choice

If a country sets a pegged exchange rate that is above 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 increasing the pegged exchange rate
• E)by increasing capital outflows

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Definitions:

Analytical

Pertaining to or proceeding by analysis (i.e., separating a whole into its constituent parts to examine or determine their relationship).

Practical

Concerned with actual use or practice rather than with theory or speculation.

Creative

The ability or quality of producing something original and worthwhile, typically through imaginative skill or artistry.

Sternberg's Definition

A conceptual framework proposed by psychologist Robert Sternberg, categorizing intelligence into analytical, creative, and practical components.