In general, whenever the costs of pegging outweigh the benefits of a non-credible peg, the government will always:
A) depreciate.
B) peg.
C) make temporary fixed rates permanent.
D) sell more government bonds.

Question

Quizplus · Accepted Answer

When the costs of pegging outweigh the benefits, it is not practical or sustainable to continue pegging the currency. In this situation, the government may choose to adopt a flexible exchange rate system and allow the currency to depreciate. This can help improve economic competitiveness and stimulate growth.

In General, Whenever the Costs of Pegging Outweigh the Benefits