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Explain case gold standard-type and reserve currency system

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Reference no: EM13868803

1. In a three-country world, a central bank ?xes one exchange rate but lets the others ?oat. Can it use monetary policy to affect output? Can it ?x both exchange rates?

2. In the Case Study on international reserves, we asserted that except in the case of a reserve currency system, an attempt by all central banks simultane- ously to raise their international reserve holdings through open-market sales of domestic assets could have a contractionary effect on the world economy. Explain by contrasting the case of a gold standard-type system and a reserve currency system.

Reference no: EM13868803

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