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Category: Economics
Under a fixed exchange rate system, setting the official price of a peso in terms of dollars automatically sets the official price of a dollar in terms of pesos. Do you agree or disagree? Explain.
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Category: Economics
What does it mean to say that a currency is overvalued? undervalued?
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Category: Economics
A country whose currency is the primary reserve currency can likely borrow at lower interest rates than it could if its currency were not the primary reserve currency. Do you agree or disagree? Explain.
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Category: Economics
What are the strong and weak points of the flexible exchange rate system? What are the strong and weak points of the fixed exchange rate system?
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Category: Economics
Suppose the United States and Japan have a flexible exchange rate system. Explain whether each of the following events will lead to an appreciation or depreciation of the U.S. dollar and Japanese yen: a. U.S. real interest rates rise above Japanese real interest rates. Suppose the United States and Japan have a flexible exchange rate system. Explai...