Suppose that the uip holds suppose a country pegs its, Business Economics

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Suppose that the uip holds suppose a country pegs its

Suppose that the UIP holds. Suppose a country pegs its currency. If investors start to believe the peg will collapse and the currency is going to depreciate, then as the government defends the peg, the interest rate will A) Not move as interest rates must remain constant in a peg B) Increase to maintain the peg C) Decrease to maintain the peg D) Not sure

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