The main problem with a system of floating exchange rates is that it

a. leads to excessively high exchange rates that reduce worldwide international trade
b. creates uncertainty and reduces the profitability of international trade
c. increases the amounts of goods exported and imported so it reduces domestic demand
d. generates equilibrium for some exchange rates but not all
e. destabilizes democracies and facilitates the growth of alternative political systems

B

Economics

You might also like to view...

The components of investment expenditures include all of the following except

A) financial investment. B) residential investment. C) non-residential investment. D) inventory investment.

Economics

Assume that in recent years the cost of producing microbrew beer in the U.S. has decreased largely due to technological improvements. At the same time, more and more Americans prefer microbrew beer over wine. Which of the following best explains the

effect of these events in the microbrew beer market? A) The supply curve has shifted to the right and the demand curve has shifted to the left. As a result there has been a decrease in the equilibrium quantity and an uncertain effect on the equilibrium price. B) Both the supply and demand curves have shifted to the right. As a result, there has been an increase in the equilibrium quantity and an uncertain effect on the equilibrium price. C) Both the supply and demand curves have shifted to the right. As a result, there has been an increase in both the equilibrium price and the equilibrium quantity. D) The supply curve has shifted to the left and the demand curve has shifted to the right. As a result, there has been an increase in the equilibrium price and an uncertain effect on the equilibrium quantity.

Economics