If a Country Sets a Pegged Exchange Rate That Is

question 192

Multiple Choice

If a country sets a pegged exchange rate that is below 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 decreasing the pegged exchange rate

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Definitions:

Drive

A psychological tension and physical arousal arising when there is a need that motivates the organism to act in order to fulfill the need and reduce the tension.

Tension

The state of being stretched tight or experiencing mental or emotional strain.

Intrinsically Motivated

Being driven by internal rewards, such as personal satisfaction or the joy of doing something for its own sake.

Extrinsic Motivation

Motivation driven by external rewards such as money, fame, grades, and praise, rather than for the sake of the activity itself.