Proponents of fixed exchange rates, who argue that these rates eliminate uncertainty and therefore promote international trade, sometimes fail to recognize that:
A)fixed exchange rates may not remain fixed forever.
B)fixed exchange rates are more volatile than flexible exchange rates.
C)exchange rates do not matter to businesses, so the uncertainty has no impact.
D)international trade is bad for the economy and should not be promoted.

Question

Quizplus · Accepted Answer

Note that fixed exchange rates are seldom permanent. Often there are economic forces that require changes in fixed exchange rates.

Proponents of Fixed Exchange Rates, Who Argue That These Rates