When Argentina fixed the exchange rate of their peso to the U.S. dollar, one outcome was:

Question

Quizplus · Accepted Answer

When Argentina fixed the exchange rate of their peso to the U.S. dollar, they effectively pegged their currency to the value of the U.S. dollar. This meant that the Argentinean central bankers no longer had control over their domestic interest rate, as they had to adjust it to match the rate set by the Federal Open Market Committee (FOMC) in the United States. Therefore, choice C is the correct answer. Choices A and B are incorrect because in reality, the central bankers lost control of their domestic interest rate. Choice D is also incorrect as the use of the U.S. dollar for all transactions is not a direct outcome of fixing the exchange rate.

When Argentina Fixed the Exchange Rate of Their Peso to the U.S