If a country has a fixed exchange rate, it:
A) has a value that is set by the government.
B) allows for more predictability and stability.
C) helps attract foreign investment and gives businesses that depend on overseas trade more confidence to invest.
D) All of these statements are true.

Question

Quizplus · Accepted Answer

A fixed exchange rate means that the government sets the value of its currency against another currency, which provides more predictability and stability in the exchange rate. This, in turn, can attract foreign investment and provide confidence for businesses that rely on overseas trade. Therefore, all of the statements in A, B, and C are true.

If a Country Has a Fixed Exchange Rate, It