In a Fixed Exchange Rate System, the Center Country, to Whose

question 130

Multiple Choice

In a fixed exchange rate system, the center country, to whose currency the other countries peg their exchange rate, will:

• A) find it difficult to conduct autonomous monetary policy.
• B) find it difficult to conduct autonomous fiscal policy.
• C) easily implement monetary and fiscal policy to suit its economy.
• D) defer to advice from other countries in conducting its domestic policy.

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Definitions:

Mediation

A conflict resolution process where a neutral third party facilitates negotiations between disputing parties to help them reach a mutually acceptable agreement.

Voluntarily

Acting based on one's own free will or choice, rather than due to pressure or obligation.

Third Party

An entity (individual or group) involved in a situation or transaction but not one of the principal actors.

Conflict

A situation or period in which there is a serious disagreement or argument, often a prolonged one, between two or more parties.