In pegged currency systems,the country fixes its currency value to the value of some other stable currency and:
A)does not interfere with the value of its currency unless it determines that the currency to which its currency is pegged is not performing as expected.
B)only acts to affect the value of its currency if the value of its currency decreases significantly.
C)allows its currency value to fluctuate in a narrow band around the fixed value and then takes steps to maintain its currency's value within that band.
D)only acts to affect the value of its currency if the value of its currency increases significantly.

Question

Quizplus · Accepted Answer

In pegged currency systems, the country allows its currency value to fluctuate in a narrow band around the fixed value and then takes steps to maintain its currency's value within that band. This is done to ensure stability of the currency value and minimize fluctuations in trade and investment. The country will intervene in the market by buying or selling its own currency to maintain the exchange rate within the desired range.

In Pegged Currency Systems,the Country Fixes Its Currency Value to the Value