In the context of foreign exchange rates, when the country of Zansia fixes its currency Zan to the U.S dollar at 5.5 Zan per dollar, it can be said that:
A) Zansia spreads its currency, Zan, to the U.S dollar at 5.5 Zan per dollar.
B) Zansia pegs its currency, Zan, to the U.S dollar at 5.5 Zan per dollar.
C) Zansia forecasts its currency, Zan, to the U.S dollar at 5.5 Zan per dollar.
D) Zansia exchanges its currency, Zan, with the U.S dollar at 5.5 Zan per dollar.

Question

Quizplus · Accepted Answer

When a country fixes its currency to another currency at a specific rate, it is said to peg its currency to that currency. In this case, Zansia is pegging its currency, Zan, to the U.S dollar at a rate of 5.5 Zan per dollar.

In the Context of Foreign Exchange Rates, When the Country