Compare the impact of monetary policy under fixed exchange rates with those under flexible exchange rates.

Impact of Monetary Policy under Fixed Exchange Rates:

Under a fixed exchange rate regime, the value of a country's currency is pegged to another currency or a basket of currencies. This peg is maintained by the central bank through intervention in the foreign exchange market. The impact of monetary policy under fixed exchange rates differs from that under flexible exchange rates:

1. Restricted Autonomy: In a fixed exchange rate regime, the central bank's autonomy in conducting monetary policy is limited. The central bank needs to align its domestic policy goals with the exchange rate commitment, which can constrain its ability to independently pursue domestic objectives.

2. Limited Control over Money Supply: The central bank's control over the money supply is influenced by the need to maintain the fixed exchange rate. If the money supply increases significantly, it can lead to pressure on the ______ ______ ______ _______ ____ ___.
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