MACROECONOMICS
14th Edition
ISBN: 9781337794985
Author: Baumol
Publisher: CENGAGE L
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Question
Chapter 19, Problem 6DQ
To determine
To describe: The reasons for establishing the system of fixed exchange rates. Also, state the flaws that happened to be the reasons for the breakdown of the system, during the year 1971.
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Students have asked these similar questions
While floating exchange rates have several advantages, they can also lead to increased volatility in currency values. How do central banks strike a balance between allowing market forces to determine exchange rates and intervening to prevent excessive currency fluctuations that could negatively impact their economies?
In chapter 11, "International Economics," of Naked Economics, Charles Wheelan explains alternative exchange rates systems.
To which of the below systems does he refer when he describes thus:
Countries pledge to maintain the exchange rate for their currency at some predetermined rate of exchange with a country or a group of other countries.
A) Fixed exchange rates
B) Floating exchange rates
C) The gold standard
D)The value of a nation's currency is matched to the currency of another economy, as the Argentine currency was set equal to the U.S. dollar.
Outline the arguments for and against a system of fixed foreign exchange rates.
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