What Is a Problem in Emerging Markets That Affects a Nation's

Multiple Choice

What is a problem in emerging markets that affects a nation's ability to peg its currency?

A) The low level of GDP means the demand for money is always small.
B) The high level of GDP means the demand for money is always large.
C) As the nation develops, the ratio of the demand for money to GDP rises.
D) Because of the volatility of GDP, the demand for money is volatile and the nation must hold higher levels of reserves to peg.