Select the correct benefits and drawbacks to a floating exchange rate:

a. Supply and demand are market driven but governments can manipulate value by either printing money or removing money from circulation.
b. Could be used to replace domestic currency if it is weak, financial institutions are suspicious, and the dollar is strong.
c. Could do very well if tied to a strong currency but suffers from vulnerability to other country’s recession.
d. Could produce a private good economy but encourages a currency black market.

Ans: a