If a Country Chooses to Have Free Capital Flows and to Conduct

question 86

Multiple Choice

If a country chooses to have free capital flows and to conduct an independent monetary policy, then it must:

• A) live with exchange-rate volatility.
• B) restrict its citizens from participating in world financial markets.
• C) give up the use of monetary policy for purposes of domestic stabilization.
• D) have a fixed exchange rate.

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