Because Many Emerging Market Countries Have Not Developed the Political

question 5

Multiple Choice

Because many emerging market countries have not developed the political or monetary institutions that allow the successful use of discretionary monetary policy, ________.

• A) they have little to gain from pegging their exchange rate to an anchor country like America or Germany
• B) they have little to gain from using a nominal anchor, because it would mean a monetary policy that is overly expansionary
• C) they have very little to gain from an independent monetary policy, but a lot to lose
• D) they would be better off giving their central bankers the independence to use discretion, rather than take their discretion away through any nominal anchor

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Definitions:

Consolidated

Pertaining to the aggregation of financial statements of a parent company with those of its subsidiaries to present as a single entity for financial reporting purposes.

Notional Profits

Hypothetical profits calculated based on assumptions or projections, not actual cash received.

NCI Ownership Interest

Non-Controlling Interest ownership interest, representing shareholders' equity in subsidiaries not wholly owned by the parent company.

Parent Ownership Interest

The portion of equity interest in a subsidiary that is directly or indirectly owned by the parent company.