When a fixed exchange rate system is adopted, it results in all of the following except:
A) reduced uncertainty about exchange rate.
B) decreased volatility in prices.
C) increased volume of trade.
D) decreased volume of trade.

Question

Quizplus · Accepted Answer

When a fixed exchange rate system is adopted, it can lead to decreased flexibility in adjusting exchange rates to changing economic conditions, which can result in decreased volume of trade. However, it can also lead to reduced uncertainty about exchange rates, decreased volatility in prices, and increased volume of trade in some cases.

When a Fixed Exchange Rate System Is Adopted, It Results