The purpose of a fixed exchange rate system is to keep a currency's value within a narrow band.

A exchange rate system allows currency values to fluctuate against one another based on supply and demand.

A fixed exchange rate  work better for countries that already have a stable and effective monetary policy.

Some economists suggest that one benefit of adopting a fixed-exchange-rate regime is that it forces the central bank to:prevent excessive increases in the money supply.use money supply changes as the main policy tool to keep the economy at full employment.keep inflation rates to zero percent.allow the money supply to grow unchecked.

A fixed exchange rate regime(a) forces a country to give up free international flows of capital.(b) forces a country to abandon independent monetary policy(c) can eliminate exchange rate uncertainty(d) is the model used by the U.S. Federal Reserve.

Fill in the Blank QuestionFill in the blank question.The current exchange-rate system is considered to be a mostly exchange-rate system because of the periodic currency interventions by governments.