Monetary policy autonomy and automatic trade balance adjustments are the two main elements of the case for fixed exchange rates.

Question

Quizplus · Accepted Answer

Monetary policy autonomy and automatic trade balance adjustments are arguments for flexible exchange rates, not fixed exchange rates. Fixed exchange rates limit monetary policy autonomy because the central bank must maintain the exchange rate, and they do not automatically adjust the trade balance.

Monetary Policy Autonomy and Automatic Trade Balance Adjustments Are the Two