A situation where a country announces a parity value for its currency and permits small variations around that value, but also adjusts the parity regularly by small amounts according to various indicators, is known as
A) a dirty float.
B) a crawling peg.
C) a managed float strategy of "leaning against the wind."
D) a "wider band."

Question

Quizplus · Accepted Answer

A crawling peg system is a type of exchange rate regime where a country's currency is pegged to another currency, such as the US dollar, but the peg is adjusted periodically by small amounts according to various economic indicators. This allows for some flexibility in the exchange rate, while still maintaining stability. It is sometimes also referred to as a managed float, but that term can encompass other exchange rate regimes as well. A dirty float involves larger fluctuations in the exchange rate and less government intervention, while a wider band allows for larger fluctuations within a set range. A managed float strategy of "leaning against the wind" involves government intervention to counteract market fluctuations, but does not necessarily involve a specific parity value or crawling peg.

A Situation Where a Country Announces a Parity Value for Its