Asked by Jacob Delgado on Apr 25, 2024
Verified
In the context of foreign exchange rates, when the country of Zansia fixes its currency Zan to the U.S dollar at 5.5 Zan per dollar, it can be said that:
A) Zansia spreads its currency, Zan, to the U.S dollar at 5.5 Zan per dollar.
B) Zansia pegs its currency, Zan, to the U.S dollar at 5.5 Zan per dollar.
C) Zansia forecasts its currency, Zan, to the U.S dollar at 5.5 Zan per dollar.
D) Zansia exchanges its currency, Zan, with the U.S dollar at 5.5 Zan per dollar.
Foreign Exchange Rates
The price of one country's currency in terms of another currency, affecting international trade and investment.
Pegs
A system where a country's currency value is fixed relative to a reference value, such as gold or another currency.
- Comprehend how fixed exchange rates function and the concept of pegging a currency.
Verified Answer
DA
Donovan anderson5 days ago
Final Answer :
B
Explanation :
When a country fixes its currency to another currency at a specific rate, it is said to peg its currency to that currency. In this case, Zansia is pegging its currency, Zan, to the U.S dollar at a rate of 5.5 Zan per dollar.
Learning Objectives
- Comprehend how fixed exchange rates function and the concept of pegging a currency.