Jay asked in Social ScienceEconomics · 8 months ago

Econ question about exchange rates?

"European countries that want the benefits of fixed exchange rates with their neighboring countries without the costs could simply impose strict controls on investment flows into and out of their country."

Is this true or false?

Update:

This is a hypothetical question. Assume European countries do this. Would they be able to impose strict controls on investment flows?

2 Answers

Relevance
  • Oiy
    Lv 6
    8 months ago

    true. Look at India which has the very toughest capital control on earth. It might look good because the exchange rate remains flexible in the eyes of investors.

  • Peter
    Lv 7
    8 months ago

    Most European countries use the same currency, so there are no exchange rates to trouble them.

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