International businesses like a fixed exchange-rate system because
A)they like large swings in currency values when devaluation or revaluation occur.
B)they profit by speculating on devaluation or revaluation.
C)they can plan better if they know what the exchange rate will be.
D)fixed exchange rates are economically efficient.

Question

Quizplus · Accepted Answer

International businesses prefer fixed exchange-rate systems because they provide certainty and stability, allowing companies to plan their investments and operations with greater confidence. Knowing what the exchange rate will be enables companies to estimate costs and revenues, which can improve decision-making and reduce the risk of financial losses. Large swings in currency values, as in options A and B, increase uncertainty and risk for businesses. While fixed exchange rates may not always be the most economically efficient option, they provide steady and predictable conditions that can benefit international trade and investment.

International Businesses Like a Fixed Exchange-Rate System Because