Small nations (e.g.,the Ivory Coast) whose trade and financial relationships are mainly with a single partner tend to utilize:
A) Pegged exchange rates
B) Freely floating exchange rates
C) Managed floating exchange rates
D) Crawling pegged exchange rates

Question

Quizplus · Accepted Answer

Small nations whose trade and financial relationships are mainly with a single partner often face high levels of economic uncertainty and vulnerability to external shocks. Therefore, to stabilize their prices and currencies, they tend to use pegged exchange rates, which fix the value of their currency against another currency, such as the US dollar or the euro. This helps them to maintain a stable exchange rate, reduce inflation, and facilitate trade and investment with their main partner.

Small Nations (E