Which of the following characterizes the peg policy in foreign exchange rates?
A) It links a developed country's currency to the gold standard.
B) It stabilizes the import and export prices for developing countries.
C) It is a type of floating exchange rate policy.
D) It is primarily used by developed countries to control inflation.

Question

Which of the following characterizes the peg policy in foreign exchange rates? 
A) It links a developed country's currency to the gold standard. 
B) It stabilizes the import and export prices for developing countries. 
C) It is a type of floating exchange rate policy. 
D) It is primarily used by developed countries to control inflation.

Quizplus · Accepted Answer

A peg policy involves fixing the exchange rate of a country's currency to another currency or a fixed standard, such as gold. This can help stabilize import and export prices for developing countries by providing predictability in exchange rates. It is not a type of floating exchange rate policy, as the exchange rate is fixed. It may be used by both developed and developing countries for various reasons, but it is not primarily used to control inflation.

Which of the Following Characterizes the Peg Policy in Foreign