When a Country Pegs the Value of Its Currency to the Value

question 46

Multiple Choice

When a country pegs the value of its currency to the value of some other currency,that country:

• A)formally agrees not to adopt economic policies that are inconsistent with those of the country to which the currency is pegged.
• B)by necessity has to follow the macroeconomic policies of the country to which the currency is pegged.
• C)is free to adopt its own economic policy without regard to the economic policies of the country to which the currency is pegged.
• D)is free to adopt its own economic policies but is required to consult with the country to which the currency is pegged.

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