Identifying a Fixed Exchange Rate Regime

Very Easy Currency Exchange Rates Exchange Rate Regimes

In the world of international finance, countries adopt different exchange rate regimes to manage their currencies. An exchange rate regime is the way a country manages its currency in relation to other currencies and can significantly impact economic stability and international trade.

Which of the following is an example of a fixed exchange rate regime?

The U.S. dollar is allowed to appreciate and depreciate freely against other currencies.

The Chinese yuan is pegged to the U.S. dollar within a narrow band.

The Euro fluctuates based on supply and demand in the foreign exchange market.

Hint

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