Under a Crawling Peg Exchange Rate Policy, the Exchange Rate

Multiple Choice

Under a crawling peg exchange rate policy, the exchange rate is

A) depreciated at a rate roughly equal to the inflation differential between a country and its trading partners
B) depreciated at the same rate as the domestic rate of inflation
C) appreciated at the same rate as the domestic rate of inflation
D) changed slowly at the same rate as the increase in the trade deficit (surplus)
E) depreciated slowly so that the real exchange rate will change gradually to improve the country's competitiveness