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Proponents Of The Fixed Exchange Rate System Argue That
Proponents Of The Fixed Exchange Rate System Argue That. True an overvalued dollar makes u.s. True advocates of a fixed exchange rate system argue that fixed exchange rates promote international trade.

It helps smaller and less developed countries to attract foreign investment. Flexible exchange rates may promote international trade, but under a fixed exchange rate system at least we know what the rates will be from day to day. A fixed exchange rate is an exchange rate system in which domestic currency is pegged to other currencies or gold prices.
It Is Further Held That, Fixed Exchange Rates Seemed To Work Well Under The Favourable Conditions Of The Nineteenth Century.
This kind of exchange rate developed after the world war ii. There is too great a chance that the exchange rate will diverge from the equilibrium exchange rate.b. Proponents of the fixed exchange rate system argue that answers:
(3) The Harmonization Of Tax Rates;
Been sufficiently flexible to weather major economic turbulence. Compare and contrast the way that this is brought about under a fixed and a flexible exchange rate regime. Been effective because it is a nonsystem without fixed rules.
The Proponents Of Fixed Exchange Rates Argue That Flexible Exchange Rates Hamper International Trade Because Of Uncertainty Over What The Exchange Rate Will Be.
Force a nation to use its domestic macroeconomic policies to maintain an exchange rate. Smith argues that american producers cannot compete with foreign producers because wages are lower in foreign countries than in the united states. Proponents of flexible exchange rate used to argue that under that system, there would be no need for central banks to hold foreign exchange reserves.
Flexible Exchange Rates May Promote International Trade, But Under A Fixed Exchange Rate System At Least We Know What The Rates Will Be From Day To Day.
For instance, the rupiah exchange rate against the us dollar is fixed at rp14,000 per usd. In practice we observe that all central banks hold substantial amounts of reserves. 4) added the volatility needed by the exchange rate market.
(4 Marks) (C) Why Could A System Of Flexible Exchange Rates Be Inflationary?
Today, most fixed exchange rates are pegged to the u.s. Nations might sacrifice their domestic economic policy goals for the sake of maintaining the exchange rate. (i) in the 19 th century, countries permitted the balance of payments to influence the domestic economic policy.
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