The central bank of Country X buys and sells its own currency to ensure that the currency is always exchanged in a ratio of 2:1 with the currency of Country Y. What can we conclude about these two currencies?
A. Country X is using the Euro.
B. Country X has pegged its currency to the currency of Country Y.
C. Country X has an undesirable currency.
D. Country X allows its currency to float relative to the currency of Country Y.
Answer:B
The central bank of Country X buys and sells its own currency to ensure that the currency is always exchanged in a ratio of 2:1 with the currency of Country Y. What can we conclude about these two currencies?
A. Country X is using the Euro. B. Country X has pegged its currency to the currency of Country Y. C. Country X has an undesirable currency. D. Country X allows its currency to float relative to the currency of Country Y.