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:
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