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Card 11 / 19:
Is a country for which imports and exports make up a large fraction of the GDP more likely to adopt a flexible exchange rate or a fixed (hard peg) exchange rate?
Variations in exchange rates, because they change import and export prices, disturb international trade flows. When trade is a large part of a nation’s economic activity, government will find it more advantageous to fix exchange rates to minimize disruptions of trade flows.
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