Fixed exchange rate: -Monetary policy of particular national economy could be more imposed. -Speculative actions could be reduced and discouraged. -Foreign could be easily monitored and effects if foreign trade could be minimized. -Reduction of inflation pressures. -Currency could be overpriced or underpriced which could harm the economy. Floating exchange rates: -Allows for the an economy to have a more driven monetary policy. -Trade deficit could be easily treated. -Foreign exchange reserves would not be required. Most countries might start with floating exchange rates thanks to the disadvantages with fixed exchange rates. In order to select the right one, there needs to be a future plan, goals, and demands. For example, a stronger foreign exchange rate would be preferred if a country is trying to attract foreign investments. The decision about the type of exchange rate system all depends upon the time frame for situations. Frequent changes in international markets could create changes in the exchange rates just as easily. please help with this discussion
Fixed exchange rate: -Monetary policy of particular national economy could be more imposed. -Speculative actions could be reduced and discouraged. -Foreign could be easily monitored and effects if foreign trade could be minimized. -Reduction of inflation pressures. -Currency could be overpriced or underpriced which could harm the economy. Floating exchange rates: -Allows for the an economy to have a more driven monetary policy. -Trade deficit could be easily treated. -Foreign exchange reserves would not be required. Most countries might start with floating exchange rates thanks to the disadvantages with fixed exchange rates. In order to select the right one, there needs to be a future plan, goals, and demands. For example, a stronger foreign exchange rate would be preferred if a country is trying to attract foreign investments. The decision about the type of exchange rate system all depends upon the time frame for situations. Frequent changes in international markets could create changes in the exchange rates just as easily. please help with this discussion
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Fixed exchange rate:
-Monetary policy of particular national economy could be more imposed.
-Speculative actions could be reduced and discouraged.
-Foreign could be easily monitored and effects if foreign trade could be minimized.
-Reduction of inflation pressures.
-Currency could be overpriced or underpriced which could harm the economy.
Floating exchange rates:
-Allows for the an economy to have a more driven monetary policy.
-Trade deficit could be easily treated.
-Foreign exchange reserves would not be required.
Most countries might start with floating exchange rates thanks to the disadvantages with fixed exchange rates. In order to select the right one, there needs to be a future plan, goals, and demands. For example, a stronger foreign exchange rate would be preferred if a country is trying to attract foreign investments. The decision about the type of exchange rate system all depends upon the time frame for situations. Frequent changes in international markets could create changes in the exchange rates just as easily.
please help with this discussion
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