If a country's central bank seeks to stabalize the price level and if real shocks from abroad are important,than
A) a flexible exchange rate is preferable to a fixed exchange rate.
B) flexible and fixed exchange rates are equivalent.
C) the central bank will not be able to realize its goal.
D) a fixed exchange rate is preferable to a flexible exchange rate.
E) the central bank should devalue under flexible exchange rates.
Correct Answer:
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