Combinations of monetary and exchange rate policies

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Reference no: EM131223144

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.

Reference no: EM131223144

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