Author Question: Present the case for floating exchange rates. What will be an ideal ... (Read 76 times)

NguyenJ · **on:** Jun 30, 2018

Present the case for floating exchange rates.

What will be an ideal response?

Question 2

Describe the main provisions of the Maastricht Treaty of 1991.

What will be an ideal response?

Tabitha_2016 · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

(1 ) Monetary policy autonomy Governments would be able to use monetary policy to reach internal and external balance. No country would be forced to import inflation and deflation from abroad.
(2 ) Symmetry The United States would no longer be able to set world monetary conditions all by itself. The United States would have the same opportunity as other countries to influence its exchange rate against foreign currencies.
(3 ) Exchange rates as automatic stabilizers The long and agonizing periods of speculation preceding exchange rate realignments would not occur under floating.

Answer to Question 2

Called for a single currency by January 1, 1999, harmonizing social security policy within the European Union, and centralizing foreign and defense policy decisions.