Aruba Pegs Its Currency (The Aruban Florin) to the U

Multiple Choice

Aruba pegs its currency (the Aruban florin) to the U.S. dollar at a rate of Af 2 = $US1. Suppose that the actual exchange rate is equal to this pegged rate. Suppose that Aruba's money supply is Af 20 billion and Aruba's central bank holds $5 billion of dollar reserves and Af 10 billion of domestic bonds. What is the backing ratio for Aruban florins?

A) 10.5%
B) 21%
C) 50%
D) 89.5%