The benefits of adopting a flexible exchange rate is that, a.in response to shocks to the demand for Australian exports, the value of the currency would adjust to moderate these effects b. changes in the interest rate will have no effect on the exchange rate that is determined in the foreign exchange market c.the exchange rate can be more volatile d. an economy will be able to well predict the prices of exports and imports
The benefits of adopting a flexible exchange rate is that, a.in response to shocks to the demand for Australian exports, the value of the currency would adjust to moderate these effects b. changes in the interest rate will have no effect on the exchange rate that is determined in the foreign exchange market c.the exchange rate can be more volatile d. an economy will be able to well predict the prices of exports and imports
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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The benefits of adopting a flexible exchange rate is that,
a.in response to shocks to the
b. changes in the interest rate will have no effect on the exchange rate that is determined in the foreign exchange market
c.the exchange rate can be more volatile
d. an economy will be able to well predict the
Why A is the correct answer? What is meant by a flexible exchange rate?
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