One advantage of adopting a fixed exchange rate is that:
A)it makes business planning easier.
B)interest cost fluctuations on foreign loans can be avoided.
C)inflation can be avoided.
D)the country can avoid current account surpluses.

Question

Quizplus · Accepted Answer

Adopting a fixed exchange rate makes business planning easier as businesses can better forecast pricing and revenues based on a stable exchange rate. This can reduce uncertainty and increase investment. The other options are incorrect as a fixed exchange rate does not necessarily avoid inflation, interest cost fluctuations, or current account surpluses.

One Advantage of Adopting a Fixed Exchange Rate Is That