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With a Credible Peg, Whenever There Is a Rise in the Foreign

Question 3

Multiple Choice

With a credible peg, whenever there is a rise in the foreign interest rate:


A) there is a drop in the domestic interest rate.
B) the exchange rate changes.
C) there is an equal rise in the domestic interest rate.
D) there will be no change in the domestic interest rate.

Correct Answer:

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