If Conditions Hold for the Long-Run Monetary Exchange Rate Model

question 39

Multiple Choice

If conditions hold for the long-run monetary exchange rate model, it can provide opportunities for nations to achieve less price-level volatility by:

• A) constraining policy choices to respect a nominal anchor, such as a target for a nominal exchange rate.
• B) allowing international organizations such as the IMF to control economic variables.
• C) conducting a currency reform effort.
• D) embarking on a campaign for dollarization.

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