To Maintain a Pegged Rate, a Nation Faces a Trilemma

Multiple Choice

To maintain a pegged rate, a nation faces a trilemma and must also:

A) generate extra export revenues.
B) watch carefully to ensure imports and exports are equal.
C) adjust its interest rates and money supply to ensure the home interest rate is equal to the foreign interest rate to prevent pressure on the exchange rate.
D) restrict foreign capital inflows and domestic capital outflows.