Explain the cases for and against flexible and fixed exchange ...

[serike]

Explain the cases for and against flexible and fixed exchange rate regimes.
 
  What will be an ideal response?

Question 2

Which of the following will cause an increase in the steady-state growth rate of capital?
 
  A) an increase in the saving rate
  B) an increase in the population growth rate
  C) a temporary increase in technological progress
  D) all of the above
  E) none of the above

[manuelcastillo]

Answer to Question 1

Case for fixed: cannot trust the central bank to pursue responsible monetary policy, reduces relative price variability by fixing E. Case for flexible: enables monetary policy to serve as a stabilization tool.

Answer to Question 2

B