Which of the Following Is Not a Major Disadvantages of a flExible

question 283

Multiple Choice

Which of the following is not a major disadvantages of a flexible exchange-rate system?

• A) It is susceptible to wild swings in rates, causing high uncertainty and reduced trade.
• B) It could drain the foreign-exchange reserves of a nation.
• C) A depreciation of a nation's currency would worsen its terms of trade.
• D) Wild swings in exchange rates may destabilize the domestic economy through the effects on the traded-goods sectors.

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