Suppose Country A pegs its currency to the dollar.If Country A wants to keep the exchange rate fixed,what are its options under each of the following scenarios? Is there an advantage to one of the options?
(A)U.S.interest rates rise.
(B)There is a recession in the United States so that household income falls.
(C)Country A experiences a positive wealth effect that raises consumer spending.

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The Answer of Suppose Country A pegs its currency to the dollar.If Country A wants to keep the exchange rate fixed,what are its options under each of the following scenarios? Is there an advantage to one of the options?
(A)U.S.interest rates rise.
(B)There is a recession in the United States so that household income falls.
(C)Country A experiences a positive wealth effect that raises consumer spending.

Suppose Country a Pegs Its Currency to the Dollar