The cost of floating exchange rates is so small that European governments have had no problem in sacrificing domestic autonomy to stabilize exchange rates.

Question

Quizplus · Accepted Answer

This statement is incorrect. The cost of floating exchange rates can be significant, and some European governments have chosen to relinquish some domestic autonomy in order to participate in exchange rate stabilization efforts (such as joining the Eurozone). However, not all European countries have done so and the decision to participate in exchange rate stabilization is often a contentious issue.

The Cost of Floating Exchange Rates Is So Small That