The Effect of an Exchange Rate System on the Price

question 154

Multiple Choice

The effect of an exchange rate system on the price level between countries is that:

• A) exchange rate volatility causes the prices to converge between countries.
• B) a fixed exchange rate results in price convergence.
• C) a fixed exchange rate results in price divergence.
• D) all member nations of the ERM saw a divergence in prices.

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