Beginning in 1991, Argentina Conducted Its Monetary Policy Through a Currency

question 9

Multiple Choice

Beginning in 1991, Argentina conducted its monetary policy through a currency board. In January 2002, Argentina abandoned the currency board and allowed its currency to float against other currencies. The country took this step because:

• A) the Argentine Peso had grown too strong against major trading powers thus the currency board policies were hurting the domestic economy.
• B) the United States required the action as a prerequisite to finalizing a free trade zone with all of North, South, and Central America.
• C) the Argentine government lost the ability to maintain the pegged relationship as in fact investors and traders perceived a lack of equality between the Argentine Peso and the U.S. dollar.
• D) all of the above

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