A system of ﬁxed exchange rates is more likely to result in exchange controls than is a system of
ﬂexible (ﬂoating) exchange rates.

Question

Quizplus · Accepted Answer

In a fixed exchange rate system, governments may impose exchange controls to maintain the value of their currency and prevent capital outflows. In a flexible exchange rate system, the market adjusts the value of currencies, reducing the need for exchange controls.

A System of ﬁXed Exchange Rates Is More Likely to Result