Proponents of the flexible exchange rate system argue that under a fixed exchange rate system,
A) there is too great a chance that the exchange rate will diverge from the equilibrium exchange rate.
B) nations that experience persistent trade deficits might be tempted to impose trade barriers.
C) nations might sacrifice their domestic economic policy goals for the sake of maintaining the exchange rate.
D) b and c
E) a, b, and c
E
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If children can be considered durable goods, then this would help explain
(a) high birth rates among farm families. (b) small family size among farm families. (c) lower birth rates in towns than in the countryside. (d) lower birth rates in the countryside than in towns.
Yvonne takes out a fixed-interest-rate loan and then inflation turns out to be higher than she had expected it to be. The real interest rate she pays is
a. higher than she had expected, and the real value of the loan is higher than she had expected. b. higher than she had expected, and the real value of the loan is lower than she had expected. c. lower than she had expected, and the real value of the loan is higher than she had expected. d. lower then she had expected, and the real value of the loan is lower than she had expected.