Proponents of Fixed Exchange Rates Argue That the Predictability of the Fixed

question 31

Multiple Choice

Proponents of fixed exchange rates argue that the predictability of the fixed exchange rate:

• A)allows monetary policy to be used to stabilize the domestic economy.
• B)increases trade and economic integration.
• C)decreases trade and economic integration.
• D)prevents exchange rate overvaluation.

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Definitions:

Capacity

The maximum level of output that a company can sustain to make a product or provide a service under normal conditions.