Proponents of Fixed Exchange Rates, Who Argue That Fixed Exchange

question 46

Multiple Choice

Proponents of fixed exchange rates, who argue that fixed exchange rates eliminate uncertainty and therefore promote international trade, sometimes fail to recognize:

• A) that fixed exchange rates may not remain fixed forever.
• B) that fixed exchange rates are more volatile than flexible exchange rates.
• C) that exchange rates do not matter to businesses, so the uncertainty has no impact.
• D) that international trade is bad for the economy and should not be promoted.

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