If a country chooses to have a monetary policy oriented toward domestic goals and the freedom of international capital movements,then

Question

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If a country chooses to have a monetary policy oriented toward domestic goals and the freedom of international capital movements, it cannot have a fixed exchange rate. This is because with a fixed exchange rate, the country has to give up its monetary policy autonomy to maintain the exchange rate. Therefore, it would be difficult to achieve domestic goals if the exchange rate is fixed.

If a Country Chooses to Have a Monetary Policy Oriented