Why Do Small Countries That Trade a Lot Generally Prefer

Why do small countries that trade a lot generally prefer to fix their exchange rates?

A) Fixed exchange rates limit the inflation small countries are prone to.
B) Fixed exchange rates provide more price stability and reduce risks for exports.
C) Small countries do not have enough market size to adequately control their own flexible exchange rates when trade flows change.
D) Small countries are unable to resist pressure from the United States to fix their currency to the dollar.

Correct Answer:

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Access For Free