Question

If a government uses monetary policy to alter the exchange rate, then it cannot at the same time use monetary policy to address issues of ______________________.

Answer 1

inflation or recession

Step-by-step explanation:

According to Tradeoffs of Soft pegs and Hard peg, which deals with exchange rates policies of a nation, it goes that, in a situation whereby a government uses monetary policy to alter the exchange rate, then it cannot at the same time use monetary policy to address issues of INFLATION OF RECESSION. This is because the altering exchange rate by monetary policy is Soft Peg while addressing the issue of inflation it recession by monetary policy is Hard peg.