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A hard peg differs from a soft peg mainly in that the hard peg holds the rate:
ADuring elections
BFor exporters
CAt all times
DIn good years
Answer & Solution
Correct answer: C. At all times
1. The distinction is about strictness rather than direction.
2. A central bank can implement soft peg and hard peg policies.
3. Both make the rate differ from the market outcome.
4. A hard peg policy attempts to preserve a fixed exchange rate.
5. It does so at all times, which is what separates it from a soft peg.
_Source: OpenStax Principles of Macroeconomics for AP Courses 2e (CC BY 4.0), Ch 15 'Exchange Rates and International Capital Flows'_
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