Fixed exchange rates may not be very costly if one of two conditions is satisfie

Question

Fixed exchange rates may not be very costly if one of two conditions is satisfied. The countries that are pegging their exchange rate

Select one:

a. face different shocks or there is high labour mobility between them.

b. face different shocks or there is low labour mobility between them.

c. face largely the same shocks or there is high labour mobility between them.

d. face largely the same shocks or there is low capital mobility between them.

e. face largely the same shocks or there is low labour mobility between them.

Explanation / Answer

Option C fits better if two countris decide tj peg an exchange rate then they will try to maintain stability of so formed economic area as well as facor of production mobility is major concern

Hence option C is correct

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