Which of the following is not a potential disadvantage of freely floating exchange rates?
A) They require larger amounts of international reserves than other exchange systems
B) Demand schedules for imports and exports may be price speculation
C) There may occur large amounts of destabilizing speculation
D) Capital movements among nations may be hindered via exchange rate fluctuations

Question

Quizplus · Accepted Answer

Freely floating exchange rates do not require large amounts of international reserves, as the exchange rate is determined by market forces rather than being maintained at a fixed level by central bank interventions.

Which of the Following Is Not a Potential Disadvantage of Freely