Why is it important to understand fixed exchange rates in the ...

[imanialler]

Why is it important to understand fixed exchange rates in the modern global economy?
 
  What will be an ideal response?

Question 2

Leontief used an input-output table in order to test the
 
  A) classical theory.
  B) the Heckscher-Ohlin theory.
  C) the Linder hypothesis.
  D) All of the above.

[stano32]

Answer to Question 1

Fixed rates continue to be important for four reasons:
1. Managed floating: Central banks intervene in foreign exchange markets.
2. Regional currency arrangements: Some countries peg their currency to another currency.
3. Developing countries and countries in transition: These countries often attempt to peg their currency to another currency.
4. Lessons of the past: Fixed exchange rates could have a resurgence.

Answer to Question 2

B