Emerging Market Countries Are in Effect Between a Rock and a Hard

question 83

Multiple Choice

Emerging market countries are in effect between a rock and a hard place because

• A)they would be wise to adopt the monetary policy of the United States by pegging their currencies to the dollar,but this policy leaves them open to speculative attacks.
• B)to avoid speculative attacks on their currencies they must peg their exchange rates to an anchor country,but this means giving central bankers in these countries too much discretion.
• C)to avoid speculative attacks on their currencies they must peg their exchange rates to an anchor country,but this means giving central bankers in these countries too little discretion.
• D)by adopting the monetary policy of the anchor country through an exchange rate peg,these countries allow for too little monetary expansion and thereby sacrifice economic growth for price stability.

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