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Up16
Leaving exchange rates to market determination and allowing the monetary authority to exercise independent monetary policy as characteristics of what type of currency regime?
- A. A managed float regime.
- B. An independently floating rate regime.
- C. A fixed-party with crawling bands regime.
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Up4
The correct answer is Option B.
Under an independently floating rate regime, the exchange rate is left to market determination and the monetary authority is able to exercise independent monetary policy aimed at achieving such objectives as price stability and full employment. The central bank also has the latitude to act as a lender of last resort to troubled financial institutions, if necessary.
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Up3
Suggestion for @MarkMeldrum and @christine – can we have the answer posted at the same time as the question, but tagged as a spoiler so that it’s hidden? For example:
This is an example of an answer!
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