A Disadvantage of Using a Pegged Currency System Is That

A disadvantage of using a pegged currency system is that:

A) the country whose currency is pegged must decide on its own economic policies.
B) the country whose currency is pegged does not have the option of adopting economic policies different from those of the country to which the currency is pegged.
C) the cost of maintaining the peg is substantial and must be paid by those transacting business in the country whose currency is pegged.
D) international currency markets shun currency whose value is pegged to another currency.

Correct Answer:

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