Under a fixed-rate unified currency regime, each country belonging to the system
a. may pursue an independent monetary policy.
b. gives up its monetary policy independence to one central bank with the power to expand and contract the money supply.
c. is committed to conducting highly expansionary monetary policy in order to maintain the convertibility of its currency.
d. must fix its domestic interest rates in order to maintain the convertibility of its currency.
B
You might also like to view...
Interest rate parity occurs when
A) interest rates are equal across nations. B) interest rate differentials are always maintained across nations. C) interest rates no longer affect the exchange rate. D) prices are equal across nations when exchange rates are taken into account. E) the interest rate in one currency equals the interest rate in another currency when exchange rate changes are taken into account. The figure above shows the demand curve for dollars in the foreign exchange market.
Most firms are not monopolies in the real world because
a. firms usually face downward-sloping demand curves b. supply curves slope upward c. price is usually set equal to marginal cost by firms d. monopolies are not efficient e. there are substitutes for most goods