Answered

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A newly independent Eastern European nation wants to adopt a floating exchange rate system in order to restore monetary control to its government. Using the monetary autonomy argument, how do this country's ministers justify establishing this system?

a. Speculation in exchange rates dampens the growth of international trade and investment.
b. Each country should be allowed to choose its own inflation rate
c. Trade deficits are determined by the balance between savings and investment in a country, not by the external value of its currency.
d. Unpredictability of exchange rate movements makes business planning difficult.
e. Variable exchange rates are more receptive to a trade balance.

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