Although the argument is weak, sterilization under a pegged system could benefit the economy by:
A) replacing outstanding debt (denominated in the domestic currency) with currency, thus reducing privately held debt.
B) reducing interest rates and stimulating the economy.
C) holding down the level of government borrowing.
D) providing funds for worker training and technology upgrades.

Question

Quizplus · Accepted Answer

Sterilization under a pegged system involves central bank actions to offset foreign exchange interventions, which can replace domestic currency debt with currency, reducing privately held debt.

Although the Argument Is Weak, Sterilization Under a Pegged System