Problem
1. If financial capital is relatively mobile between countries, what difficulties emerge if the various countries have different interest rate targets for attaining domestic inflation and/or growth objectives? (Assume fixed exchange rates.)
2. Explain why a country that wishes to have an independent monetary policy as well as a fixed exchange rate would have to institute controls on capital flows into and out of the country in order to accomplish these two objectives.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.