Which of the following is/are INCORRECT? An argument against floating exchange rates is that
A) a fixed rate automatically prevents instability in the domestic money market from affecting the economy if shocks come from home domestic money market.
B) a fixed rate might become unpredictable, complicating economic planning.
C) a rise in money demand under a fixed exchange rate would have no effect on the exchange rate and output.
D) a fixed rate functions within the price-specie-flow mechanism and maintains a balance of payments equilibrium,
E) a fixed rate automatically prevents instability in the economy from output market shocks.

Question

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The Answer of Which of the following is/are INCORRECT? An argument against floating exchange rates is that
A) a fixed rate automatically prevents instability in the domestic money market from affecting the economy if shocks come from home domestic money market.
B) a fixed rate might become unpredictable, complicating economic planning.
C) a rise in money demand under a fixed exchange rate would have no effect on the exchange rate and output.
D) a fixed rate functions within the price-specie-flow mechanism and maintains a balance of payments equilibrium,
E) a fixed rate automatically prevents instability in the economy from output market shocks.

Which of the Following Is/are INCORRECT? an Argument Against Floating