In the example of the peg between Britain and Germany, what would have been the case if Britain had adhered to the pegged exchange rate?

A) It would not have had the option of raising its own rate.
B) It would have been able to inflate its currency to keep output stable.
C) It would not have been able to inflate its currency to keep output stable.
D) It would have had to raise taxes and balance its budget.

Ans: C) It would not have been able to inflate its currency to keep output stable.