Nolan asked in Social ScienceEconomics · 1 month ago

Econ Question?

 "European countries that want the benefits of fixed exchange rates with their neighboring countries without the costs could simply impose strict controls on investment flows into and out of their country." Answer true or false about this statement. Explain. 

1 Answer

  • Oiy
    Lv 5
    1 month ago

    True. Capital control is one of the measures to stabilize the exchange rate. Controlling the capital flows will save the monetary policy because the exchange rate won't have any relationship with the fund rate anymore.

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