One disadvantage facing a freely flexible exchange rate system is that is can cause
A) overshooting
B) competitive devaluations
C) hedging
D) loss of monetary policy control

Name: One disadvantage facing a freely flexible exchange rate system is that is can cause A) overshooting B) competitive devaluations C) hedging D) loss of monetary policy control
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Question

Quizplus · Accepted Answer

Overshooting refers to the excessive fluctuation in exchange rates in a freely flexible exchange rate system, which can lead to economic instability.

One Disadvantage Facing a Freely Flexible Exchange Rate System Is