A fixed exchange rate regime enhances the power of a country's central bank.

Question

Quizplus · Accepted Answer

In a fixed exchange rate regime, the central bank's ability to adjust the exchange rate is limited as it has to maintain the fixed rate. This may limit the central bank's power to conduct monetary policy and manage the economy. In contrast, under a flexible exchange rate regime, the central bank has more flexibility to adjust the exchange rate and use monetary policy to manage the economy.

A Fixed Exchange Rate Regime Enhances the Power of a Country's