A Ratio Indicating How Safe the Peg Is from Breaking

question 95

Multiple Choice

A ratio indicating how safe the peg is from breaking is calculated by _______ and is called ________.

• A) foreign reserves as a percent of GDP; the safety margin
• B) foreign reserves as a percent of the total money supply; the backing ratio
• C) money demand as a percent of money supply; the financial adequacy quotient
• D) foreign reserves as a percent of domestic credit; the marginal propensity to break

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