A monetary policy strategy that uses a fixed exchange rate regime that ties the value of a currency to the currency of a large,low inflation country is called ________ targeting.

Question

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This policy strategy is called exchange-rate targeting as it involves fixing the exchange rate of a country's currency to a larger, stable currency to stabilize its value and control inflation. This approach is different from inflation targeting, which focuses on maintaining a stable and low rate of inflation through monetary policy tools.

A Monetary Policy Strategy That Uses a Fixed Exchange Rate