Which of the following defines a hard peg?
A)An exchange rate determined by the market
B)An exchange rate that fluctuates within a set band
C)An exchange rate that is not allowed to vary
D)An exchange rate that is backed by gold

Question

Quizplus · Accepted Answer

A hard peg is a fixed exchange rate system in which the value of a currency is pegged to another currency or a basket of currencies, and the central bank does not allow the exchange rate to vary beyond a narrow margin. This means that the central bank must be willing to buy or sell its own currency in the foreign exchange market to maintain the fixed exchange rate.

Which of the Following Defines a Hard Peg