EMERGENCY PLEASE ........................................ Why is fixed exchange rate system preferable when there is a pressure of...

EMERGENCY PLEASE ........................................

Why is fixed exchange rate system preferable when there is a pressure of depreciation to the local currency and the need of expansionary monetary policy to fight recession?

Solutions

Expert Solution

Fixed exchange rate system is always preferable in case where Government is planning ab expansionary monetary policy to encounter recession.

In this system the rate of exchange is in total control with the government and is not affected by Supply or demand of money in the economy. So it will help to prevent the adverse effects of Depreciation and inflation due to increased supply of money (of government adopts fixed exchange rate system instead of Floating system.)

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

URGENT! Why is fixed exchange rate system preferable when there is a pressure of depreciation to...

URGENT! Why is fixed exchange rate system preferable when there is a pressure of depreciation to the local currency and the need of expansionary monetary policy to fight recession?

Explain using economic theory why or why not China’s use of a fixed exchange rate system...

Explain using economic theory why or why not China’s use of a fixed exchange rate system will be a good/bad exchange rate regime policy. Based on your answer compare and/or contrast with the German economy. Why should the German economy or why shouldn’t the German economy pursue a fixed exchange rate regime? Paragraph

Explain the difference between fixed rate exchange system vs. the floating exchange rate system. Explain the...

Explain the difference between fixed rate exchange system vs. the floating exchange rate system. Explain the advantages and disadvantages for each system. image answer is not allow

Explain the differences between a pegged or fixed exchange rate system and a floating exchange rate...

Explain the differences between a pegged or fixed exchange rate system and a floating exchange rate system. Provide several pros and cons of each. Provide examples of countries that use each strategy. [This is a Short Answer prompt.]

Explain the differences between a pegged or fixed exchange rate system and a floating exchange rate...

Compare and contrast the difference between a fixed and a floating exchange rate system. Why do...

Compare and contrast the difference between a fixed and a floating exchange rate system. Why do some countries peg their currencies to the dollar? What is the risk of fixed exchange rate systems? Explain using a real world example.

Describe the pros and cons of a fixed exchange rate system.

What are a fixed exchange rate and a floating exchange rate? Please explain in eextensive detail...

What are a fixed exchange rate and a floating exchange rate? Please explain in eextensive detail and provide and example for both detail. So I may understand thoroughly.

“Policymakers are in favor of using the flexible exchange rate system compare with the fixed exchange...

“Policymakers are in favor of using the flexible exchange rate system compare with the fixed exchange rate system to attain both the internal balance and external balance of the economy.” Explain.

Which of the following explanation is NOT consistent with fixed exchange rate system?

Which of the following explanation is NOT consistent with fixed exchange rate system?a. Central banks do not need foreign currency reserve at all.b. Under fixed exchange rate system, inflation can easily be spread among trading partners.c. Relatively easy to forecast exchange rate and thus it is helpful to increase trade.d. As the structure of a nation’s economy changes, the exchange rate should eventually be changed. But fixed system restricts this adjustment of relative price and the internal balance of payment...

Subjects