If a Country Chooses to Have a Monetary Policy Oriented

question 72

Multiple Choice

If a country chooses to have a monetary policy oriented toward domestic goals and the freedom of international capital movements,then

• A)it can have a fixed exchange rate.
• B)it cannot have a fixed exchange rate.
• C)it cannot balance its current account.
• D)it cannot have a fiscal policy oriented toward domestic goals.
• E)it cannot control money supply growth.

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Definitions:

National Saving

The total amount of savings generated within a country, which is equal to the sum of private and public savings.

Government Expenditures

The total amount of money that a government spends in a specific period, including spending on public services, welfare, and infrastructure.

Default

The failure to promptly pay interest or principal when due, which can occur in regard to debts like loans or securities.

Interest Rate

The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan.