Under a Floating Exchange Rate Regime

question 36

Multiple Choice

Under a floating exchange rate regime:

• A)only fiscal policy must be used to reconcile the goals of internal and external balance.
• B)the changes in the exchange rate will take care of external balance leaving macroeconomic policy to take care of internal balance.
• C)deficits and surpluses in the official settlements balance will be the primary concern of policy makers.
• D)monetary policy must be used to manage the exchange rate.

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