Fear of floating is:
A) when the benefits of floating exchange rates outweigh the costs.
B) when the attractions of fixed exchange rates are large relative to those of floating.
C) when countries adopt the gold standard.
D) when countries say they are floating, but fix their exchange rates in practice.

Question

Quizplus · Accepted Answer

Fear of floating refers to a situation where a country prefers fixed exchange rates to floating exchange rates even when the benefits of floating exchange rates outweigh the costs. This could be due to factors such as the attraction of the stability that comes with fixed exchange rates or fear of potential currency fluctuations. Therefore, option B is the correct answer as it states that fear of floating occurs when attractions of fixed exchange rates are large relative to those of floating.

Fear of Floating Is