Figure 19-7
-Refer to Figure 19-7.If the Indian government pegs its currency to the dollar at a value above $.02/rupee,we would say the currency is

Question

Figure 19-7 
-Refer to Figure 19-7.If the Indian government pegs its currency to the dollar at a value above $.02/rupee,we would say the currency is

Quizplus · Accepted Answer

If the Indian government pegs its currency to the dollar at a value above $.02/rupee, then the Indian rupee will be overvalued with respect to the US dollar. This means that the Indian rupee will be relatively more expensive compared to the US dollar than what the market would have determined based on supply and demand. Therefore, the best choice is B) overvalued.

Figure 19-7 -Refer to Figure 19-7.If the Indian Government Pegs Its Currency