All Other Things Being Equal, We Expect Fixed Exchange Rates

question 125

Multiple Choice

All other things being equal, we expect fixed exchange rates to promote trade by lowering transactions costs. If that is true, then differences in prices measured in a common currency should be ________among countries with ______exchange rates than among countries with ______ rates.

• A) lower; fixed; floating
• B) lower; floating; fixed
• C) higher; fixed; floating
• D) the same; fixed; floating