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When a Country Pegs the Value of Its Currency to the Value

Question 34

Multiple Choice

When a country pegs the value of its currency to the value of some other currency,that country:


A) formally agrees not to adopt economic policies that are inconsistent with those of the country to which the currency is pegged.
B) by necessity has to follow the macroeconomic policies of the country to which the currency is pegged.
C) is free to adopt its own economic policy without regard to the economic policies of the country to which the currency is pegged.
D) is free to adopt its own economic policies but is required to consult with the country to which the currency is pegged.

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