An exchange rate regime in which policymakers peg the value of the domestic currency to the currency of another nation and allow the domestic currency to fluctuate around the parity within bands of plus or minus less than 1 percent of parity is called a:
A) pegged with bands system.
B) currency basket system.
C) conventional peg.
D) dirty or managed float.

Question

Quizplus · Accepted Answer

A conventional peg is a type of exchange rate regime where a country's currency value is fixed or pegged to another major currency, with only minor fluctuations allowed within a narrow band, typically less than 1 percent.

An Exchange Rate Regime in Which Policymakers Peg the Value