Advocates of a floating exchange rate regime argue that removal of the obligation to maintain exchange rate parity would restore monetary control to a government.

Question

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Advocates of a floating exchange rate regime believe that it would allow a government to have more control over its monetary policy because it would no longer have to maintain exchange rate parity. This is because under a fixed exchange rate regime, a government must use its monetary policy to defend the exchange rate, which can limit its ability to address other economic issues.

Advocates of a Floating Exchange Rate Regime Argue That Removal