July 12, 2010
Disadvantage of Floating Exchange Rate System?
ellie a asked:
Proponents of a fixed exchange rate system point out that a major drawback of a floating exchange rate is that it
Proponents of a fixed exchange rate system point out that a major drawback of a floating exchange rate is that it
is responsible for creating trade deficits.
helps eliminate the uncertainty about the value of a currency.
keeps a nation from trading fairly with other nations.
is based on the value of gold held by a nations.
leads to uncertainty about the value of goods traded internationally.
I am 100% sure its not C. Please explain your reasoning behind the answer. I am practicing questions for a quiz online.
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Comments on Disadvantage of Floating Exchange Rate System?
E
It’s not A because it can float down which is good for your balance of trade.
it’s not B because it increased the uncertainty of the value of the money cause it can move around
c is just nonsense
d few if any nations use a gold standard so this isn’t relevant
e your goods could become expensive or cheap in comparison to other goods.