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:

Liquidation Expenses

Costs associated with winding up a company's operations and selling its assets, often occurring during the process of liquidation or bankruptcy.

Safe Payments

Transactions that are protected against fraud, theft, or any other types of financial risks, ensuring the security of the payment process.

Liquidation Expenses

Costs associated with winding up a company's affairs and distributing its assets to claimants.

Capital Account Balances

The net result of public and private international investments flowing in and out of a country, showing changes in national ownership of assets.