Which is not a serious disadvantage associated with freely fluctuating exchange rates?

A) uncertainty which tends to diminish trade
B) greater instability in unemployment levels
C) longer lags in eliminating balance of payments surpluses or deficits
D) swings in the terms of trade related to currency appreciation or depreciation

Freely Fluctuating Exchange Rates

Exchange rates that are determined by the open market forces of supply and demand without direct government intervention.

Currency Appreciation

An increase in the value of one currency relative to other currencies in the foreign exchange market.

Balance of Payments

A financial statement that summarizes an economy's transactions with the rest of the world for a specific period.