The Central Bank of Country X Buys and Sells Its

Multiple Choice

The central bank of Country X buys and sells its own currency to ensure that the currency is always exchanged in a ratio of 2:1 with the currency of Country Y. What can we conclude about these two currencies?

A) Country X is using the Euro.
B) Country X has pegged its currency to the currency of Country Y.
C) Country X has an undesirable currency.
D) Country X allows its currency to float relative to the currency of Country Y.