According to our textbook,those in favour of floating exchange rates argue that floating rates __________.
A) discourage speculation
B) help confuse trade imbalances
C) decrease uncertainty
D) have no effect on trade imbalances
E) help adjust trade imbalances

Question

Quizplus · Accepted Answer

Those in favor of floating exchange rates argue that they help adjust trade imbalances. This is because floating rates allow for market forces to determine the value of a currency, which can result in a potentially weaker currency that makes exports cheaper and imports more expensive, thus helping to rebalance trade deficits.

According to Our Textbook,those in Favour of Floating Exchange Rates