With flexible exchange rates, instability may occur because Multiple Choice inflation may occur if the economy is at or near full-employment and the dollar depreciates making imports more expensive. domestic industries that produce goods for export may at times be stimulated and at other times be depressed due to fluctuations in the exchange rate. both inflation may occur if the economy is at or near full-employment and the dollar depreciates making imports more expensive and domestic industries that produce goods for export may at times be stimulated and at other times be depressed due to fluctuations in the exchange rate. None of the answers are correct