Fixed exchange rate regimes
A)existed prior to the nineteenth century but were then superseded by the gold standard.
B)lower the transactions costs of buying and selling goods and assets.
C)result in higher world interest rates.
D)were first established by the GATT in 1971.

Question

Quizplus · Accepted Answer

Fixed exchange rate regimes can lower the transactions costs of buying and selling goods and assets by providing stability and predictability in currency values. However, they can sometimes result in distortions in international trade and capital flows. Fixed exchange rate regimes existed prior to the nineteenth century and were also used alongside the gold standard in the early twentieth century. The GATT (General Agreement on Tariffs and Trade) was established in 1947 to promote international free trade, not to establish fixed exchange rate regimes. Fixed exchange rate regimes also do not necessarily result in higher world interest rates as interest rates are influenced by various factors such as central bank policies, inflation, and economic growth.

Fixed Exchange Rate Regimes