Question

The fixing of east and west germany's currencies at a 1:1 ratio to each other during the german unification in 1990 is an example of a _____.
a. managed float rate policy
b. target exchange rate policy
c. fixed exchange rate policy
d. floating rate policy

Answer 1

The correct option is C.
A Fixed exchange rate policy refers to a country exchange rate policy under which the government linked the official exchange rate to that of another country's currency or to the price of gold. The major purpose of fixed exchange rate policy is to keep a country's currency value within a narrow range.