Which of the following statement is FALSE? Group of answer choices It is difficult to...
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Finance
Which of the following statement is FALSE? Group of answer choices
It is difficult to maintain the peg when a country experiences major political or economic problems.
Most large developed countries such as the United States, the United Kingdom, Australia, Canada, and Japan combine government intervention with market forces to set exchange rates.
The interest rates of pegged currency will move in tandem. In other words, if Country As currency is pegged to Country Bs, when Country B raises its interest rate, Country A will also raise its interest rate.
Dollarization (i.e., replacing the local currency with U.S. dollar) is a step further beyond the currency board because it forces the local currency to be replaced with the U.S. dollar.
A free-floating FX regime does not require central bank to maintain exchange rates within specified boundaries.
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