Explanation:

- Option 1: None

- This is incorrect. Flexible exchange rates do have effects, both positive and negative.

- Option 2: Creates instability

- Flexible exchange rates can lead to exchange rate volatility. This can cause uncertainty for businesses and investors, potentially leading to economic instability.

- Option 3: Has no effect on stability

- This is incorrect. Exchange rate fluctuations can impact the economic stability of a country.

- Option 4: Creates stability

- This is incorrect. While flexible rates can allow economies to adjust naturally to shocks, they can also introduce instability due to unpredictable currency movements.