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(Figure: Central Bank Balance Sheet) When an Economy with a Pegged

Question 2

Multiple Choice

(Figure: Central Bank Balance Sheet) When an economy with a pegged exchange rate operates with the money supply backed 100% by reserves, it is at point __________ on the diagram, and the situation is known as __________. (Figure: Central Bank Balance Sheet) When an economy with a pegged exchange rate operates with the money supply backed 100% by reserves, it is at point __________ on the diagram, and the situation is known as __________. A) Z; complete sterilization B) B; modified fixed/float C) M; freely floating system D) X; currency board system


A) Z; complete sterilization
B) B; modified fixed/float
C) M; freely floating system
D) X; currency board system

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