If Mexico Wants to Fix the Peso to the U

question 47

Multiple Choice

If Mexico wants to fix the peso to the U.S. dollar in the short run:

• A) Mexico's monetary policy must be opposite the U.S. monetary policy.
• B) Mexico must adjust its interest rates by the same amount as changes in the federal funds rate.
• C) Mexico must ensure its inflation rate is the same as U.S. inflation.
• D) population growth in the U.S. and Mexico must be equal.
• E) It will never be able to maintain a fixed exchange rate.

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