Which of the following is a way in which a fixed exchange rate regime imposes discipline?
A)The need to maintain a fixed rate puts a brake on competitive devaluations.
B)It imposes fiscal discipline on countries,thereby reducing market activity.
C)It increases demand for products and services thereby increasing productivity.
D)It imposes monetary discipline by making governments set exchange rates.

Question

Quizplus · Accepted Answer

A fixed exchange rate regime imposes discipline in two ways.First,the need to maintain a fixed exchange rate puts a brake on competitive devaluations and brings stability to the world trade environment.Second,a fixed exchange rate regime imposes monetary discipline on countries,thereby curtailing price inflation.

Which of the Following Is a Way in Which a Fixed