Question: Assuming the country is open to international capital flows which

Assuming the country is open to international capital flows, which of the following combinations of monetary and exchange-rate policies are viable? Explain your reasoning.
(a) A domestic interest rate as a policy instrument and a floating exchange rate.
(b) A domestic interest rate as a policy instrument and a fixed exchange rate.
(c) The monetary base as a policy instrument and a floating exchange rate.


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  • CreatedOctober 02, 2014
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