In a pegged exchange rate system, a country will peg the value of its currency to:
A)an index of the world's major currencies determined by the International Monetary Fund.
B)an average of the historic values of its own currency.
C)a major currency.
D)the currencies of the countries with which it trades most frequently.

Question

Quizplus · Accepted Answer

In a pegged exchange rate system, a country will peg the value of its currency to a major currency, such as the US dollar or the euro. This provides stability in international trade and investments, as the exchange rate will not fluctuate dramatically. The choice of which major currency to peg to may depend on factors such as trade relationships, political alignments, and economic conditions.

In a Pegged Exchange Rate System, a Country Will Peg