If interest rates are set to maintain a fixed exchange rate they cannot be set independently to influence the domestic economy.

Name: If interest rates are set to maintain a fixed exchange rate they cannot be set independently to influence the domestic economy.
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Question

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When a country maintains a fixed exchange rate, its central bank must adjust interest rates to keep the exchange rate stable, limiting its ability to use them for domestic economic management.

If Interest Rates Are Set to Maintain a Fixed Exchange