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

question 228

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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Definitions:

9-Year

An undefined term likely referring to a period or duration of nine years.

Compounded Quarterly

This refers to the process where interest is calculated and added to the principal sum of an investment or loan on a quarterly basis.

12%

A representation of twelve parts in a hundred, often used to describe interest rates, growth percentages, or discounts.

3 Years

A period or duration of three calendar years.