Whenever a nation opts to back its fixed exchange rate 100% with foreign currency reserves, it is known as:
A) a floating rate system.
B) a currency peg.
C) a currency board.
D) a full concentration ratio.

Question

Quizplus · Accepted Answer

When a nation backs its fixed exchange rate 100% with foreign currency reserves, it is known as a currency board. A currency peg refers to a country's commitment to keep its currency at a fixed exchange rate with another currency, while a floating rate system allows the exchange rate to fluctuate based on market forces. Full concentration ratio, on the other hand, is a term used in economics to describe the degree of market share concentration in an industry.

Whenever a Nation Opts to Back Its Fixed Exchange Rate