Which of the following arrangements allows for the least amount of discretionary policy?
A)a currency board
B)a target zone
C)ad hoc intervention
D)a dirty floating exchange rate system
E)a freely floating exchange rate system

Question

Quizplus · Accepted Answer

In a currency board system, the central bank is committed to maintaining a fixed exchange rate with another currency and holding reserves in that currency to back the value of its own currency. This leaves little room for discretionary policy as the exchange rate is fixed and the central bank has limited authority to adjust monetary policy.

Which of the Following Arrangements Allows for the Least Amount