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Which of the Following Statements Best Describes the Goal of a Currency

Question 2

Multiple Choice

Which of the following statements best describes the goal of a currency board and the greatest weakness of this system?


A) A currency board can instill confidence in a currency but may be useless if the anchor currency becomes devalued.
B) A currency board can help central banks to address local problems with monetary policy, but there is no way to make sure they do.
C) A currency board can ensure at least a moderate amount of stability in an economy but leaves central banks with no way to address local problems with monetary policy.
D) A currency board can instill confidence in a currency, as all local currency is backed up by another currency, but there is no real way to enforce this.

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