One of the Principal Advantages of Adopting a Fixed Exchange

question 22

Multiple Choice

One of the principal advantages of adopting a fixed exchange rate is

• A) relinquishing independent monetary policy
• B) that it prevents a nation from having to impose restrictions on capital flows
• C) that interest rates no longer have to be restricted
• D) that currency values may appreciate or depreciate nominally, but cannot fluctuate in real terms
• E) that the domestic economy is insulated from events overseas