With the enactment of a flexible exchange rate system in late 1974,
A)countries gained greater independence in establishing their own monetary policies.
B)exchange rate risk was sharply curtailed.
C)Bretton Woods achieved its greatest influence.
D)foreign exchange forward and futures contracts no longer were needed.

Question

Quizplus · Accepted Answer

The flexible exchange rate system gave countries greater independence to decide and implement their own monetary policies, as they were no longer tied to fixed exchange rates. This increased the variability of exchange rates and eliminated the need for foreign exchange forward and futures contracts, but it also heightened exchange rate risk rather than curtailed it. Bretton Woods, a system of fixed exchange rates, became obsolete with the adoption of flexible exchange rates.

With the Enactment of a Flexible Exchange Rate System in Late