In a Noncooperative Environment of Pegged Exchange Rates, If the Home

Multiple Choice

In a noncooperative environment of pegged exchange rates, if the home nation is experiencing high inflation due to excessive demand, it may choose to ______, which would cause______.

A) forgo the pegged exchange rate; extreme depreciation
B) devalue its currency; the foreign nation to suffer deficient demand for its products
C) cut the monetary growth rate; a rise in interest rates
D) revalue its currency; the foreign nation to suffer excessive demand for its products