Countries with fixed exchange rates will have their interest rates moving in the same direction.

Question

Quizplus · Accepted Answer

Countries with fixed exchange rates tend to have their interest rates moving in the same direction in order to maintain the fixed exchange rate. This is because changes in interest rates can affect the demand for a country's currency, which in turn can affect the exchange rate. Therefore, countries with fixed exchange rates often coordinate their monetary policies to avoid large fluctuations in their exchange rates.

Countries with Fixed Exchange Rates Will Have Their Interest Rates