Consider the Following Scenario

question 34

Multiple Choice

Consider the following scenario.The Swiss franc is fixed to the U.S.dollar.Market pressures lead to a move away from the peg.Which of the following can be used to restore the previous peg?

• A) The Swiss central bank can use a commodity such as gold to back the previous peg.
• B) The Swiss government can lower domestic prices to offset import pressures.
• C) Allow the exchange by the market and in the long run the peg will be restored.
• D) The Swiss central bank can purchase or sell U.S. dollars.

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