Why Might a Nation Seek to Maintain a Pegged Exchange

question 57

Multiple Choice

Why might a nation seek to maintain a pegged exchange rate?

• A) It makes business planning easier for firms involved in the global economy.
• B) It removes the need to intervene in the foreign exchange market.
• C) It ensures that the exchange rate will remain at its equilibrium.
• D) It makes their currency more attractive on the foreign exchange market.

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Definitions:

Chebysheff's Theorem

A statistical theorem that provides a minimum bound on the proportion of observations within a specified number of standard deviations from the mean for any distribution shape.

Bell Shaped Distribution

A probability distribution that forms a symmetric bell-shaped curve, commonly associated with the normal distribution.

Coefficient of Variation

A uniform metric showing the spread of a probability or frequency distribution as a percentage relative to the average.

Standard Deviation

A statistic that measures the dispersion or variation of a set of data points from their mean.