If a government wishes to reduce uncertainty with respect to its exchange rate, it can
A) establish fixed exchange rates
B) establish floating exchange rates
C) equilibrium exchange rates
D) establish uniform exchange rates
E) practice arbitrage

Question

Quizplus · Accepted Answer

Establishing fixed exchange rates reduces uncertainty by maintaining a constant exchange rate, which provides stability and predictability in international transactions.

If a Government Wishes to Reduce Uncertainty with Respect to Its