If exchange rates end up in the right ranges, the free market will drive each country to shift resources into those sectors in which it enjoys a comparative advantage.

Question

Quizplus · Accepted Answer

This is based on the principle of comparative advantage, which suggests that countries will specialize in producing goods for which they have a lower opportunity cost, leading to more efficient global production and trade. Exchange rates that reflect the true economic value of currencies help in accurately determining comparative advantages.

If Exchange Rates End Up in the Right Ranges, the Free