Which of the Following Conditions Would Make Fixed Exchange Rates

question 3

Multiple Choice

Which of the following conditions would make fixed exchange rates relatively unattractive for a nation?

• A) high levels of foreign exchange reserves
• B) relatively little involvement in global capital markets
• C) immobility of labor and sticky wages
• D) weak central bank credibility
• E) heavy reliance on trade with the country whose currency will be the peg

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Definitions:

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