When the Central Bank Adopts a Currency Board, It Is

question 147

Multiple Choice

When the central bank adopts a currency board, it is considered ______, because a shock to money demand _______.

• A) a hard peg; can be covered at any level without a change in domestic credit
• B) a soft peg; can be absorbed by a change in domestic credit
• C) a reversion to floating rates; is impossible
• D) the reinstatement of a gold standard; cannot be covered any other way

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