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    Question

    The exchange rate system where the value of a currency

    is pegged to another major currency or basket of currencies is called:
    A Floating Exchange Rate Correct Answer Incorrect Answer
    B Fixed Exchange Rate Correct Answer Incorrect Answer
    C Managed Floating Correct Answer Incorrect Answer
    D Currency Board Correct Answer Incorrect Answer

    Solution

    Under a Fixed Exchange Rate system, a country's currency value is tied (pegged) to another major currency (like USD or EUR) or a basket, with the central bank intervening to maintain the rate.

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