In the context of international economics, which scenario best illustrates the concept of "currency pegging"? a) Country A decides to fix its exchange rate to the US dollar and maintains this rate through central bank interventions. b) Country B allows its currency value to fluctuate freely based on market forces of supply and demand. c) Country C adopts the euro, replacing its national currency as part of the European Union. d) Country D's currency value fluctuates in response to changes in its gold reserves.
In the context of international economics, which scenario best illustrates the concept of "currency pegging"? a) Country A decides to fix its exchange rate to the US dollar and maintains this rate through central bank interventions. b) Country B allows its currency value to fluctuate freely based on market forces of supply and demand. c) Country C adopts the euro, replacing its national currency as part of the European Union. d) Country D's currency value fluctuates in response to changes in its gold reserves.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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In the context of
a) Country A decides to fix its exchange rate to the US dollar and maintains this rate through central bank interventions.
b) Country B allows its currency value to fluctuate freely based on market forces of supply and
c) Country C adopts the euro, replacing its national currency as part of the European Union.
d) Country D's currency value fluctuates in response to changes in its gold reserves.
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