Floating exchange rates ensure:
A)full employment in the trading countries.
B)domestic price stability.
C)equilibrium in the overall balance of payments.
D)a surplus in the trade balance.

Question

Quizplus · Accepted Answer

Floating exchange rates help to ensure equilibrium in the overall balance of payments as they allow the currency to fluctuate according to market demand and supply. This helps to adjust trade imbalances and maintain a stable international economic environment. However, they do not necessarily ensure full employment or domestic price stability, and they may result in a trade deficit or surplus depending on the economic conditions of the underlying countries.

Floating Exchange Rates Ensure