Which of the following is an argument for a floating exchange rate system?
A)Each country should be allowed to choose its own inflation rate.
B)Speculation in exchange rates dampens the growth of international trade and investment.
C)Unpredictability of exchange rate movements makes business planning difficult.
D)Removal of the obligation to maintain exchange rate parity destroys a government's monetary control.
E)Trade deficits can be determined by the balance between savings and investment in a country, not by the external value of its currency.

Question

Quizplus · Accepted Answer

Advocates of floating exchange rates argue that each country should be allowed to choose its own inflation rate (the monetary autonomy argument).

Which of the Following Is an Argument for a Floating