One Argument for a System of Fixed Exchange Rates Such

question 28

Multiple Choice

One argument for a system of fixed exchange rates such as that established under the Bretton Woods agreement in 1944 is that fixed exchange rates

• A) prevent countries from having chronic balance-of-payments deficits.
• B) maintain the price of gold.
• C) help all countries carry out domestic full-employment monetary and fiscal policies.
• D) minimize volatility in international currency markets.
• E) eliminate the need for governments to buy and sell their own currencies in foreign exchange markets.

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