Fixed exchange rates give countries too much freedom over their monetary policies, thereby threatening higher rates of inflation.

Question

Quizplus · Accepted Answer

Fixed exchange rates limit a country's ability to adjust its monetary policies to combat inflation and other economic problems. This is because the exchange rate is fixed and cannot be changed independently. Therefore, fixed exchange rates are more likely to limit inflation rather than threaten higher rates of inflation.

Fixed Exchange Rates Give Countries Too Much Freedom Over Their