Fixed exchange rates impose a discipline to _______________ to maintain the fixed rate.
A) keep inflation down
B) keep interest rates low
C) avoid intervention
D) increase the national debt

Question

Quizplus · Accepted Answer

Fixed exchange rates require countries to maintain low inflation to ensure that their currency values remain stable relative to the currency to which they are pegged. This helps in maintaining the fixed rate by keeping the purchasing power of their currency stable.

Fixed Exchange Rates Impose a Discipline to _______________ to Maintain