A fixed exchange rate system is alleged to:
A)be efficient
B)adjust rates smoothly and does not require the use of policies
C)lead to policy mistakes
D)destabilize speculation

Question

Quizplus · Accepted Answer

Fixed exchange rate systems can lead to policy mistakes, such as trying to maintain an artificially high or low exchange rate, which can have negative effects on the economy. Additionally, fluctuations in global markets and changes in other countries' economic policies can make it difficult to maintain a fixed exchange rate, leading to potential instability.

A Fixed Exchange Rate System Is Alleged To