Emerging market countries are in effect between a rock and a hard place because
A) they would be wise to adopt the monetary policy of the United States by pegging their currencies to the dollar,but this policy leaves them open to speculative attacks.
B) to avoid speculative attacks on their currencies they must peg their exchange rates to an anchor country,but this means giving central bankers in these countries too much discretion.
C) to avoid speculative attacks on their currencies they must peg their exchange rates to an anchor country,but this means giving central bankers in these countries too little discretion.
D) by adopting the monetary policy of the anchor country through an exchange rate peg,these countries allow for too little monetary expansion and thereby sacrifice economic growth for price stability.
Correct Answer:
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