If the Fed establishes goals for inflation and growth that are very different from other countries,
A)flexible exchange rates will return to fixed rates.
B)there will be substantial fluctuations in exchange rates.
C)much of the risk of international trading will be eliminated.
D)the action by the Fed will be investigated by Congress.

Question

Quizplus · Accepted Answer

When the Fed establishes goals for inflation and growth that are very different from other countries, this can lead to substantial fluctuations in exchange rates because investors and traders will adjust their expectations and behaviors accordingly. This can create uncertainty and volatility in currency markets, which can be challenging for businesses and governments that engage in international trade and investment. However, this does not necessarily mean that flexible exchange rates will return to fixed rates, that much of the risk of international trading will be eliminated, or that the action by the Fed will be investigated by Congress.

If the Fed Establishes Goals for Inflation and Growth That