A Lesson That Policymakers Should Learn from the Argentinean Experience

question 47

Multiple Choice

A lesson that policymakers should learn from the Argentinean experience with currency boards is:

• A) poor fiscal policies can undermine any monetary policy regime.
• B) a flexible exchange rate is always preferred to a pegged exchange rate.
• C) the only fixed exchange rate that works is the gold standard.
• D) they never work.

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Definitions:

Altruism

The selfless concern for the well-being of others without expecting any reward or benefit in return.

Egoism

An ethical theory that treats self-interest as the foundation of morality.

Reciprocity Principle

A social norm suggesting that people are likely to respond to actions with similar actions, contributing to cooperation and social exchange.

Compliance

Superficial, public and transitory change in behaviour and expressed attitudes in response to requests, coercion or group pressure.