This topic contains a solution. Click here to go to the answer

Author Question: What are the three main exchange rate systems, and how do they operate? What will be an ideal ... (Read 134 times)

K@

  • Hero Member
  • *****
  • Posts: 608
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?



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

reversalruiz

  • Sr. Member
  • ****
  • Posts: 327
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@

  • Hero Member
  • *****
  • Posts: 608


 

Did you know?

Cyanide works by making the human body unable to use oxygen.

Did you know?

Warfarin was developed as a consequence of the study of a strange bleeding disorder that suddenly occurred in cattle on the northern prairies of the United States in the early 1900s.

Did you know?

Not getting enough sleep can greatly weaken the immune system. Lack of sleep makes you more likely to catch a cold, or more difficult to fight off an infection.

Did you know?

Immunoglobulin injections may give short-term protection against, or reduce severity of certain diseases. They help people who have an inherited problem making their own antibodies, or those who are having certain types of cancer treatments.

Did you know?

The Romans did not use numerals to indicate fractions but instead used words to indicate parts of a whole.

For a complete list of videos, visit our video library