The formation of a(n)_____________ eliminates the uncertainty that arises when exchange rates are not permanently fixed,which in turn stimulates specialization in production among member nations.
A)optimum currency area
B)adjustable peg system
C)fixed exchange rate system
D)flexible exchange rate system

Question

Quizplus · Accepted Answer

An optimum currency area is a region in which a single currency or exchange rate regime is optimal for facilitating economic transactions and efficiency. By eliminating uncertainty in exchange rates, it can stimulate production and specialization among member nations. B) and C) both refer to fixed exchange rates, which may not necessarily eliminate uncertainty as they can still be subject to adjustment or speculative movements. D) refers to flexible exchange rates, which inherently have a degree of uncertainty and may not necessarily stimulate specialization.

The Formation of A(n)_____________ Eliminates the Uncertainty That Arises When