Under exchange-rate targeting,the central bank in the targeting country ________ lose the ability to pursue its own independent monetary policy and any shocks to the anchor country is ________ transmitted to the targeting country.

Question

Quizplus · Accepted Answer

Under exchange-rate targeting, the central bank loses the ability to pursue its own independent monetary policy because it must align its policies with those of the anchor country to maintain the target exchange rate. Additionally, any shocks to the anchor country's economy are directly transmitted to the targeting country through the fixed exchange rate mechanism.

Under Exchange-Rate Targeting,the Central Bank in the Targeting Country ________