Multiple Choice
Which of the following is not a major disadvantages of a flexible exchange-rate system?
A) It is susceptible to wild swings in rates, causing high uncertainty and reduced trade.
B) It could drain the foreign-exchange reserves of a nation.
C) A depreciation of a nation's currency would worsen its terms of trade.
D) Wild swings in exchange rates may destabilize the domestic economy through the effects on the traded-goods sectors.
Correct Answer:
Verified
Correct Answer:
Verified
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