What are the three main exchange rate systems, and how do they ...

[K@]

What are the three main exchange rate systems, and how do they operate?
 
  What will be an ideal response?

Question 2

The problem typically during a recession is not that there is too little money, but too little spending. If the problem was too little money, what would be its cause? If the problem was too little spending, what could be its cause?
 
  What will be an ideal response?

[reversalruiz]

Answer to Question 1

The three main exchange rate systems are the floating exchange rate, the fixed exchange rate, and the managed float. The floating exchange rate is determined solely by equilibrium of demand and supply in the foreign exchange market. The fixed exchange rate exists when the government maintains one fixed rate at which currency can be exchanged. Under a managed float, the exchange rate is mostly determined by demand and supply in the market for foreign exchange, with occasional government intervention.

Answer to Question 2

Too little money would be caused by too small of a money supply by the Federal Reserve. Too little spending could be caused by a variety of reasons such as a decrease in consumption spending by households because they become pessimistic about the future, a decrease in investment spending by firms because they lower their estimates of the future profitability of new factories and machinery, or a decrease in U.S. exports because a major trading partner is in a recession.

[K@]

Correct answers!

[reversalruiz]

Great! Please up vote