Which of the following is the merit of flexible exchange rate system ?
a) optimum allocation of resources
b) Market stability
C) External shocks
d) Stable monetary policy
Dear student Optimum resource allocation :As the exchange rate is determined where demand of foreign exchange meets its supply,it leads to equilibrium exchange rates of different currencies. It plays a vital role in allocation of foreign exchange resources by adjusting relation between foreign and domestic prices in a flexible manner. It plays an important role in economic development and promote efficiency in resource allocation. Regards