If a Small Country, Such as Argentina, Attempts to Fix

Multiple Choice

If a small country, such as Argentina, attempts to fix its currency exchange rate with the United States,

A) its inflation rate must be higher than the U.S.inflation rate.
B) its interest rates will move together with the U.S.interest rates.
C) its currency value relative to the U.S.dollar will fluctuate over time.
D) its central bank will have full flexibility in monetary policy actions.
E) it must restrict the flow of funds with the United States.