Which of the following is NOT a criticism of a flexible exchange rate system?
A) Flexible exchange rates tend to be variable and therefore cause more uncertainty.
B) Flexible exchange rate systems require discipline on the part of central banks that may not be forthcoming.
C) Under flexible exchange rates, trading countries tend to rely more heavily upon tariffs and other restrictions.
D) The flexible exchange rate system invites more destabilizing speculative forces than the fixed exchange rate system.

Question

Quizplus · Accepted Answer

Criticism C is not accurate because flexible exchange rates actually tend to reduce the reliance on tariffs and other trade restrictions. They allow countries to adjust to economic imbalances through currency valuation changes rather than through trade barriers.

Which of the Following Is NOT a Criticism of a Flexible