Solved

One Disadvantage of a Fixed Exchange Rate System Compared to a Floating

Question 22

Multiple Choice

One disadvantage of a fixed exchange rate system compared to a floating or managed float exchange rate system is


A) it is more difficult for central banks to control inflation with a fixed exchange rate system.
B) a fixed exchange rate system does not allow for government intervention.
C) a fixed exchange rate system can worsen inflation if domestic prices of imports rise quickly.
D) a fixed exchange rate system eliminates the possibility of depreciation during a recession.

Correct Answer:

verifed

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Unlock this Answer For Free Now!

View this answer and more for free by performing one of the following actions

qr-code

Scan the QR code to install the App and get 2 free unlocks

upload documents

Unlock quizzes for free by uploading documents