Final answer:Advocates claim that floating exchange rates help in correcting trade imbalances by making exports cheaper and imports more expensive when a currency depreciates. They also emphasize stable government policies leading to stable inflation and interest rates, which contribute to less volatile exchange rates.Explanation:Advocates of floating exchange rates argue that these rates can assist in adjusting trade imbalances. The rationale is that if a country is experiencing a trade deficit, their currency would depreciate, making their exports cheaper and imports more expensive, which in turn could help balance the trade. Advocates such as Milton Friedman have suggested that the implementation of stable and predictable government policies, focusing on managing inflation and interest rates, would also lead to more stable exchange rates.These advocates believe that through careful monetary policy, a central bank can maintain low and relatively stable interest rates and inflation rates, which would reduce the volatility in exchange rates. Thus, the floating exchange rate system becomes a self-regulating mechanism for the global economy, adjusting for economic uncertainties and disparities between different countries' economies....

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