Which of the following observations is true of a pegged exchange rate system?
A)It moderates inflationary pressures in a country.
B)It reduces monetary discipline in a country.
C)It usually leads to high levels of inflation.
D)It is popular among many of the world's developed nations.

Question

Quizplus · Accepted Answer

Pegged exchange rates are popular among many of the world's smaller nations.As with a full fixed exchange rate regime,the great virtue claimed for a pegged exchange rate is that it imposes monetary discipline on a country and leads to low inflation.Evidence shows that adopting a pegged exchange rate regime moderates inflationary pressures in a country.

Which of the Following Observations Is True of a Pegged