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A Country That Joins an Exchange Rate Area

Question 45

Multiple Choice

A country that joins an exchange rate area

A) gives up its ability to use the exchange rate for the purpose of stabilizing output and employment.
B) does not give up its ability to use the exchange rate and monetary policy for the purpose of stabilizing output and employment.
C) gives up its ability to use the exchange rate and monetary policy for the purpose of stabilizing output and employment.
D) gives up its ability to use only monetary policy for the purpose of stabilizing output and employment.
E) does not gives up its ability to use only monetary policy for the purpose of stabilizing output and employment.

Correct Answer: