Policy makers can select from a number of different exchange rate regimes and exchange rate policies. Which of the following policies would most likely represent a hard peg?
A) Revaluation.
B) Devaluation.
C) Dollarisation.
D) Flexible exchange rates.
E) Crawling peg.

Question

Quizplus · Accepted Answer

Dollarisation represents a hard peg as it completely replaces the domestic currency with a foreign currency, typically the US dollar, and eliminates any exchange rate fluctuations.

Policy Makers Can Select from a Number of Different Exchange