Final answer:
Mexico's level of freedom is considered low because of weak political institutions that lead to low voter turnout and mistrust in the government. A managed float or crawling peg exchange rate regime could offer stability for a country like Mexico with moderate to high inflation and a significant reliance on international trade.
Step-by-step explanation:
According to the textbook, Mexico's level of freedom is identified as low, due to weaknesses in its political institutions. Issues such as voter turnout and intimidation, and a widespread mistrust in government can jeopardize the effectiveness of democratic governance in Mexico and similar states.
A proper exchange rate regime for a country like Mexico, which has moderate to high rates of inflation and for whom international trade is important, might be a managed float or a crawling peg. This allows for some flexibility in response to market conditions while providing a measure of stability against volatile currency movements.
Conversely, the end of the Cold War brought about a reduced focus on economic policies in authoritarian regimes and a tendency towards economic growth and the strengthening of democratic institutions.