Answered

In which situation is a country most likely to choose a flexible exchange rate for its currency?

A. A country expects its currency to be more valuable than other countries' currencies.
B. A country wants to make sure that its currency is stable in all economic situations.
C. A country worries that the value of its currency could rise and fall unpredictably.
D. A country does not want market trends to affect its trade with other countries.



Answer :

GinnyAnswer

Final answer:

A country is likely to opt for a flexible exchange rate when it anticipates unpredictable fluctuations in its currency value, enabling market forces to determine the exchange rate.


Explanation:

A country is most likely to choose a flexible exchange rate when it worries that the value of its currency could rise and fall unpredictably. This unpredictability can lead to rapid movements in the exchange rate, affecting international trade and the nation's banking system. Flexible exchange rates allow daily supply and demand conditions to determine the value of the currency, providing more adaptability in economic situations.


Learn more about Exchange Rate Policies here:

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