Advocates of a ________________ exchange rate regime argue that removal of the obligation to maintain exchange rate parity restores monetary control to a government.
A) fixed
B) floating
C) narrow
D) forward
E) managed float

Question

Quizplus · Accepted Answer

Advocates of a floating exchange rate regime argue that it allows a government to pursue its domestic monetary policy without interference from the need to maintain exchange rate parity. In a floating regime, the exchange rate is determined by market forces and can fluctuate freely. This gives a government more control over its monetary policy, as it is not obligated to intervene and maintain a specific exchange rate. Therefore, option B) is the best choice for this question.

Advocates of a ________________ Exchange Rate Regime Argue That Removal