If a country pegs its currency to a foreign currency, it no longer has the ability to use monetary policy to stabilize the economy because:
A. monetary policy must be used to keep the exchange rate's market equilibrium value at its official value.
B. banks will begin to hold 100% of their deposits in reserves.
C. it must eliminate its currency from circulation and replace it with the foreign currency.
D. it no longer has a central bank.
Answer: A
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