Weighing the Costs and Benefits of Maintaining the Peg Would

question 85

Multiple Choice

Weighing the costs and benefits of maintaining the peg would involve comparing the cost of:

• A) output gaps and a slower economy versus the benefits from additional trade.
• B) fixed prices versus the benefits of higher interest rates.
• C) a trade deficit versus the benefits of greater economic growth.
• D) international instability versus the benefits of lower rates of interest.

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