Proponents of the Flexible Exchange Rate System Argue That Under

question 21

Multiple Choice

Proponents of the flexible exchange rate system argue that under a fixed exchange rate system,

• A) there is too great a chance that the exchange rate will diverge from the equilibrium exchange rate.
• B) nations that experience persistent trade deficits might be tempted to impose trade barriers.
• C) nations might sacrifice their domestic economic policy goals for the sake of maintaining the exchange rate.
• D) b and c
• E) a,b,and c

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