The choice between the alternative exchange rate regimes (fixed or floating)is likely to involve a trade-off between
A)national monetary policy autonomy and international economic integration.
B)exchange rate uncertainty and national policy autonomy.
C)balance of payments autonomy and inflation.
D)unemployment and inflation.

Question

Quizplus · Accepted Answer

Choosing a fixed exchange rate regime reduces exchange rate uncertainty but limits national monetary policy autonomy. On the other hand, choosing a floating exchange rate regime increases monetary policy autonomy but may result in greater exchange rate volatility, affecting international economic integration. Therefore, the best choice depends on the country's specific circumstances and priorities. However, in general, countries with high economic integration may benefit more from a fixed exchange rate regime, while countries with greater monetary policy needs may prefer a floating exchange rate regime.

The Choice Between the Alternative Exchange Rate Regimes (Fixed or Floating)is