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Q. Present the case against floating exchange rates.
Answer:
1.The discipline obligatory on individual countries by a fixed rate would be lost.
2. Undermine speculation and money market disturbances.
3. Damages to investment and international trade.
4. A Clumsy economic policies.
5. The misapprehension of greater autonomy.
Q. Explain why under fixed exchange rate, monetary policy is ineffective whereas under floating exchange rate it is effective in rising output. Answer: In floating by purchasi
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Q. Explain why it may make sense for the United States, Japan, and Europe to allow their mutual exchange rate to float? Answer: Even though these regions trade amid each other
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