If a country moves from fixed to flexible exchange rates, its macroeconomic policy
A) is no longer restricted.
B) is restricted, as it can only use fiscal policy to achieve its economic goals.
C) is restricted, as it can only use monetary policy to achieve its economic goals.
D) must follow policy directives from the IMF.

Question

Quizplus · Accepted Answer

When a country moves from fixed to flexible exchange rates, it gains more autonomy over its macroeconomic policy, including the ability to use both fiscal and monetary policy tools more freely, without the need to maintain a fixed exchange rate.

If a Country Moves from Fixed to Flexible Exchange Rates