Proposals to alter the international monetary system have included (1) a return to the international gold standard, and (2) establishing a single world currency under the control of an international central bank. How would the adoption of each of these plans affect the ability of any given country to carry out independent monetary and fiscal policy? Explain.

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The Answer is The adoption of a return to the international gold standard would significantly limit the ability of any given country to carry out independent monetary and fiscal policy. Under the gold standard, the value of a country's currency is directly linked to the amount of gold it holds. This means that a country's ability to expand its money supply or implement monetary policy is constrained by its gold reserves. Additionally, the gold standard limits a country's ability to use fiscal policy, as it restricts the government's ability to issue debt and finance spending through borrowing.

On the other hand, establishing a single world currency under the control of an international central bank would also limit the ability of any given country to carry out independent monetary and fiscal policy. With a single world currency, individual countries would lose control over their own monetary policy, as it would be determined by the policies of the international central bank. Similarly, fiscal policy would also be constrained, as countries would have limited ability to issue their own currency or control interest rates.

In both scenarios, the ability of any given country to carry out independent monetary and fiscal policy would be significantly reduced, as their policies would be subject to the constraints and decisions of the international monetary system.

Proposals to Alter the International Monetary System Have Included (1)