Author Question: Differentiate between a managed exchange rate and a fixed exchange rate. What will be an ideal ... (Read 95 times)

Tirant22 · **on:** Jun 30, 2018

Differentiate between a managed exchange rate and a fixed exchange rate.

What will be an ideal response?

Question 2

In the circular flow model, there are two types of markets: the ________ market and the ________ market.

A) goods; factor
B) supply; demand
C) households; firms
D) producers; consumers
E) service; goods

aham8f · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

If the government of a country sets a long-run value for the exchange rate and intervenes to defend that value, the exchange rate is said to be fixed. On the contrary, if the government often intervenes actively in the foreign exchange market without setting value for the exchange rate, the exchange rate is said to be managed.

Answer to Question 2

A