Question #51

A return to a fixed exchange rate system would

• provide the basis for more stability in the international financial markets and allow national governments to control inflation more easily without having to increase unemployment
• provide the capacity for national governments to resist hedge fund attacks on the currency and permit more effective trade contracts to be signed.
• provide the basis for more instability in the international financial markets and undermine the capacity of the national government to control inflation more easily without having to increase unemployment.

Answer #517

Answer: provide the basis for more instability in the international financial markets and undermine the capacity of the national government to control inflation more easily without having to increase unemployment.

Explanation

Please read Gold standard and fixed exchange rates - myths that still prevail or post a comment for further discussion.