The case against fixed exchange rates is:
A)the alleged smaller degree of uncertainty introduced into international trade and finance
B)being more likely to lead to stabilizing speculation
C)the greater price discipline than under flexible rates
D)requires the use of policies to figure out how to deal with pressures on the foreign exchange rate

Question

Quizplus · Accepted Answer

The case against fixed exchange rates is that it requires the use of policies to figure out how to deal with pressures on the foreign exchange rate. Fixed exchange rates make it difficult for policymakers to adjust to external shocks such as changes in the balance of payments or changes in the international monetary environment. Thus, there is a need for policies to manage such pressures, which can lead to difficulties in implementation and effectiveness.

The Case Against Fixed Exchange Rates Is