Question
A country operates under a floating exchange rate system. It currently has a problem of very high inflation. If it insists on using the floating
A country operates under a floating exchange rate system. It currently has a problem of very high inflation.
If it insists on using the floating exchange rate regime, what are some of the ways to help reduce the inflation rate?
Is it necessary for it to adopt a fixed exchange rate regime or even a currency board just in order to reduce the inflation rate?
If it decided to swift to a fixed exchange rate regime, what are some of the major considerations when it comes to the choice of foreign currency to peg to?
If its central bank is not independent of its government or legislation organization, how does this affect its ability to reduce the inflation rate?
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