A noncooperative outcome after the center nation has undertaken a stabilization policy in response to an asymmetric shock would be that the:
A) center country abandons its own stabilization policy in favor of the home country.
B) home country absorbs the losses resulting from the stabilization policy in the center country.
C) center country makes concessions, recognizing the impact on the home country and thereby sharing the pain.
D) peg is temporarily abandoned.

Question

Quizplus · Accepted Answer

The noncooperative outcome implies that the home country (the one not initiating the stabilization policy) ends up bearing the negative consequences of the center country's stabilization efforts, without any compensatory actions or policy adjustments from the center country.

A Noncooperative Outcome After the Center Nation Has Undertaken a Stabilization