A fixed exchange rate causes:
A) transaction costs to increase.
B) efficiency to increase only if the economies are integrated.
C) efficiency to increase under all circumstances.
D) volume of trade to decline.

Question

Quizplus · Accepted Answer

A fixed exchange rate can increase efficiency, especially in cases where economies are closely integrated, by reducing uncertainty and making transactions smoother. This does not mean efficiency increases under all circumstances, nor does it inherently lead to increased transaction costs or a decline in trade volume.

A Fixed Exchange Rate Causes