Suppose That Country a Pegs Its Currency to the Currency

question 173

Multiple Choice

Suppose that country A pegs its currency to the currency of country B. Which of the following will NOT be a benefit of this arrangement to country A?

• A) lower transactions costs for A to conduct international trade with country B
• B) increased capital flows between the two countries because of increased certainty of future exchange rates
• C) decreased migration between the two countries because of increased certainty of future exchange rates
• D) lower costs of economic transactions costs between the two countries, leading to welfare gains for country A

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Definitions:

Binding Determination

A final and legally enforceable decision or ruling, often made by an arbitrator or a regulatory agency.

Summary Jury Trial

An abbreviated trial that leads to a non-binding verdict, used as a tool for facilitating settlement in complex cases.

Jury's Verdict

The decision reached by a jury at the end of a trial, determining the guilt or innocence of the defendant or the outcome of a civil case.

Binding

Legally enforceable and obligatory; often referring to agreements, decisions, or rulings.