the pure flexible exchange rate regime, if a country runs a deficit on the overall balance (the combined balance on the current, capital, and financial accounts is negative), the central bank of the country can supply foreign exchanges out of its reserve holdings.
the pure flexible exchange rate regime, if a country runs a deficit on the overall balance (the combined balance on the current, capital, and financial accounts is negative), the central bank of the country can supply foreign exchanges out of its reserve holdings.
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter6: Managing In The Global Economy
Section: Chapter Questions
Problem 6E
Related questions
Question
Under the pure flexible exchange rate regime, if a country runs a deficit on the overall balance (the combined balance on the current, capital, and financial accounts is negative), the central bank of the country can supply foreign exchanges out of its reserve holdings.
True or false
Expert Solution
Step 1
In fixed exchange rate or currency board systems, the conversion standard stops to change according to the reference cash. In a dollarization system, there isn't actually a exchange rate, considering that the homegrown currency stops to exist. A country that takes on one of these systems stops to have financial strategy independence.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Managerial Economics: Applications, Strategies an…
Economics
ISBN:
9781305506381
Author:
James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:
Cengage Learning
Managerial Economics: Applications, Strategies an…
Economics
ISBN:
9781305506381
Author:
James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:
Cengage Learning