Which of the following arguments strengthen the idea of floating exchange rates?
A) External agencies should not interfere in the monetary policies of a country.
B) Trade deficits can be corrected through changes in exchange rates.
C) Changes in exchange rates will not impact the trade balance in a country.
D) Governments should act in ways to minimize the uncertainty in monetary markets.

Question

Quizplus · Accepted Answer

The supporters of floating exchange rates argue that floating rates can correct trade deficit by making a country's exports cheaper and its imports more expensive. They argue that exchange rate depreciation should correct the trade deficit.

Which of the Following Arguments Strengthen the Idea of Floating