Under a pegged exchange rate regime, a country will peg the value of i

QUESTION

Under a pegged exchange rate regime, a country will peg the value of its currency to that of a major currency, so that if the reference currency rises in value, its own currency rises too.

Indicate whether the statement is true or false.

ANSWER

TRUE
Under a pegged exchange rate regime, a country will peg the value of its currency to that of a major currency so that, for example, as the U.S. dollar rises in value, its own currency rises too. Pegged exchange rates are popular among many of the world’s smaller nations.