Question
Which of the following is true? a) Countries that want to have a fixed exchange-rate regime should be willing to refrain from policy changes that
Which of the following is true?
a) Countries that want to have a fixed exchange-rate regime should be willing to refrain from policy changes that lead to large international capital flows.
b) For a floating exchange rate to work for a country, it cannot have an inflation rate that is much above the inflation rate(s) of its primary trading partners.
c) Fixed exchange rates encourage countries to have different goals, priorities, and policies with respect to macroeconomic variables.
d) If capital is highly mobile, fiscal policy then loses its effectiveness under a fixed exchange rate.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started