Question

The Chinese government chooses to control the value of its currency so that it is consistently worth some fixed amount of U.S. dollars. Which of the following terms would relate to what the Chinese government would be doing?
a. floating exchange rate
b. flexible exchange rate
c. exchange rate freedom
d. pegged exchange rate

Answer 1

Answer: pegged exchange rate

Explanation:

A pegged exchange rate also referred to as the fixed exchange rate, sometimes is an exchange rate regime type whereby the value of a currency is fixed by the monetary authority of a particular country against the value of the currency of another country.

This is the type of exchange rate used by the Chinese government in the question above.