Speculators Play an Important Role in a System of Floating

question 52

Multiple Choice

Speculators play an important role in a system of floating exchange rates because

• A)to make a profit, they must buy a currency when its value is low and sell it when its value is high.
• B)their purchases and sales lead to wild gyrations in exchange rates and thus increase instability.
• C)they place additional risks on businesses that need to purchase and sell foreign currency.
• D)All of the above are correct.

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