Why do symmetric shocks not disturb fixed exchange rate systems?
A) Symmetric shocks happen only once and cause a one-time shift in interest rates.
B) Symmetric shocks imply differences in rates of interest, which is irrelevant to fixed exchange rate systems.
C) A demand shock can easily be dealt with using domestic policies that do not involve other nations.
D) Symmetric shocks require the same medicine in both economies, so monetary policy will be in a direction to help both situations.
Ans: D) Symmetric shocks require the same medicine in both economies, so monetary policy will be in a direction to help both situations.
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