The arrangement that allows a currency's exchange rates with a basket of currencies to fluctuate around a fixed rate within a narrow band of less than 1% is the conventional fixed-peg arrangement.

Here's a step-by-step explanation:

1. A conventional fixed-peg arrangement is a type of exchange rate regime where a currency's value is fixed against either the value of another single currency, to a basket of other currencies, or to another measure of value, such as gold.

2. In this arrangement, the country's central bank uses its foreign exchange reserves to maintain the exchange rate. If the exchange rate moves outside its allowed band (in this case, less than 1%), the central bank will intervene in the foreign exchange market by buying or selling its currency to bring the exchange rate back within the band.

3. The other options listed - currency board arrangement, crawling band arrangement, and crawling peg arrangement - all allow for greater fluctuations in the exchange rate.

So, the correct answer is the conventional fixed-peg arrangement.

Question

The arrangement that allows a currency's exchange rates with a basket of currencies to fluctuate around a fixed rate within a narrow band of less than 1% is the conventional fixed-peg arrangement.

Here's a step-by-step explanation:

1. A conventional fixed-peg arrangement is a type of exchange rate regime where a currency's value is fixed against either the value of another single currency, to a basket of other currencies, or to another measure of value, such as gold.

2. In this arrangement, the country's central bank uses its foreign exchange reserves to maintain the exchange rate. If the exchange rate moves outside its allowed band (in this case, less than 1%), the central bank will intervene in the foreign exchange market by buying or selling its currency to bring the exchange rate back within the band.

3. The other options listed - currency board arrangement, crawling band arrangement, and crawling peg arrangement - all allow for greater fluctuations in the exchange rate.

So, the correct answer is the conventional fixed-peg arrangement.

Knowee AI · Accepted Answer

The arrangement that allows a currency's exchange rates with a basket of currencies to fluctuate around a fixed rate within a narrow band of less than 1% is the conventional fixed-peg arrangement.

Here's a step-by-step explanation:

1. A conventional fixed-peg arrangement is a type of exchange rate regime where a currency's value is fixed against either the value of another single currency, to a basket of other currencies, or to another measure of value, such as gold.

2. In this arrangement, the country's central bank uses its foreign exchange reserves to maintain the exchange rate. If the exchange rate moves outside its allowed band (in this case, less than 1%), the central bank will intervene in the foreign exchange market by buying or selling its currency to bring the exchange rate back within the band.

3. The other options listed - currency board arrangement, crawling band arrangement, and crawling peg arrangement - all allow for greater fluctuations in the exchange rate.

So, the correct answer is the conventional fixed-peg arrangement.

Which arrangement allows a currency's exchange rates with a basket of currencies to fluctuate around a fixed rate within a narrow band of less than 1%?Multiple choice question.currency board arrangementcrawling band arrangementcrawling peg arrangementconventional fixed-peg arrangement

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