Which of the following is an argument for a fixed exchange rate system

QUESTION

Which of the following is an argument for a fixed exchange rate system?

A. Governments can contract their money supply without worrying about the need to maintain parity.

B. Trade balance adjustments do not require the intervention of the International Monetary Fund.

C. It ensures that governments do not expand the monetary supply too rapidly, thus causing high price inflation.

D. Speculations in exchange rates boost exports and reduce imports.

E. Each country should be allowed to choose its own inflation rate.

ANSWER

C