/*! This file is auto-generated */ .wp-block-button__link{color:#fff;background-color:#32373c;border-radius:9999px;box-shadow:none;text-decoration:none;padding:calc(.667em + 2px) calc(1.333em + 2px);font-size:1.125em}.wp-block-file__button{background:#32373c;color:#fff;text-decoration:none} Q. 11 Briefly explain the differences ... [FREE SOLUTION] | 91影视

91影视

Log out

Learning Materials

Features

Discover

Chapter 33: Q. 11 (page 753)

Briefly explain the differences between a flexible exchange rate system and a fixed exchange rate system.

Short Answer

Expert verified

Mostly in export business, it is regulated mostly by economics of home currency

Step by step solution

01

Introduction

The dollar exchange speed is considered and held by the authorities as in eurozone. That leader of a country establishes overall dollar's value in respect of bullion. or some value of yet another currency (typically the US currency), or indeed a global currency. A currency peg, but in the other contrary, is not something that is established and fluctuate.

02

Given Information

Any imbalances in buyers and sellers will just be instantly addressed inside this trade, giving a debt instrument "personality."

03

Explanation

- In either a price mechanism, the Treasury Department gets to buy an own currency mostly on foreign currency in compensation for said bank from which it is tied in terms of maintaining that regional Canadian dollar.

- With minimizing the related uncertainty, an exchange rate policy lowers currency fluctuations.

04

Step 4: 

  • Since this exchange - rate mechanism seems dynamic, a less proportion of foreign exchange is essential.
  • A free - floating exchange regime, but in the other end, can change global trade balance immediately.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Over 30 million students worldwide already upgrade their learning with 91影视!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

Other things being equal, what do you think should have happened in 2015 to the prices of goods and services exported by U.S. firms?

Suppose that initially in Figure 33-8, the market for Bahrain's currency, the dinar, is in equilibrium at point E1. Now, however, an increase in the U.S. real interest rate has occurred even as real interest rates in Bahrain and elsewhere in the world either have declined or have remained unchanged. What must Bahrain's central bank do, and why, if it wishes to maintain a fixed exchange rate?

Take a look at Figure 33-5. Suppose that in response to a significant rise in interest in Jane Austen's works and life, millions of U.S. residents suddenly purchase British-published books by and about the famous author and travel to Britain to visit Jane Austen's former home. What will happen to the equilibrium dollar price of the pound, and why? Does the dollar appreciate or depreciate in relation to the pound?

Identify whether each of the following items creates a surplus item or a deficit item in the current account of the U.S. balance of payments.

a. A Central European company sells products to a U.S. hobby-store chain.

b. Japanese residents pay a U.S. travel company to arrange hotel stays, ground transportation, and tours of various U.S. cities, including New York, Chicago, and Orlando.

c. A Mexican company pays a U.S. accounting firm to audit its income statements.

d. U.S. churches and mosques send relief aid to Pakistan following a major earthquake in that nation.

e. A U.S. microprocessor manufacturer purchases raw materials from a Canadian firm.

Given that foreign prices of exports of firms such as 3M, General Motors, and Under Armor also increased substantially, what do you think happened to amounts of foreign currencies supplied by foreign residents?
See all solutions

Recommended explanations on Economics Textbooks

Taxation Economics

Read Explanation
View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.