It is possible to have both a fixed exchange rate and control over your own monetary policy if you impose strict controls on financial capital flows into and out of your country.

Question

Quizplus · Accepted Answer

By imposing strict controls on financial capital flows, a country can maintain a fixed exchange rate while still having control over its monetary policy. This is because controlling capital flows can help prevent sudden changes in exchange rates and mitigate the impact of external shocks on the economy, allowing the country to pursue its own monetary policy goals.

It Is Possible to Have Both a Fixed Exchange Rate