What is the “managed float”?
What will be an ideal response?
The managed float is a way of describing the eclectic system of exchange rates that evolved after the demise of the Bretton Woods system. The managed float allows for long-term changes in exchange rates that occur because of persistent balance-of-payment surpluses or deficits. The system also permits some short-term changes in exchange rates that are the result of changing demand and supply conditions; however, central banks may intervene in the short-term to “manage” or to “stabilize” fluctuations in exchange rates that might occur because of speculative buying and which may disrupt international trade.
Aspects of the Breton Woods system also remain, albeit on a restricted basis for many of the world’s currencies. Many European nations have “pegged” the value of their currency to one another through the euro. Some less developed nations have pegged the value of their currency to the dollar, and other nations have pegged their currency to a market basket of currencies.
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The desired reserve ratio helps determine the amount of money banks can create
Indicate whether the statement is true or false
Why are high domestic savings rates important?
What will be an ideal response?
The change in the quantity demanded of gas because of increasing gas prices over the last decade:
A. was more elastic than it has been in the last six months. B. was less elastic than it has been in the last six months. C. has been relatively the same over both time periods. D. has become a non-issue for people now that they are used to higher gas prices.
Refer to the information provided in Table 14.3 below to answer the question that follows. Table 14.3B's Strategy ?AdvertiseDon't Advertise??A's profit $75 millionA's profit $200 million?AdvertiseB's profit $75 millionB's profit $50 millionA's Strategy????Don'tA's profit $50 millionA's profit $100 million?AdvertiseB's profit $200 millionB's profit $100 millionRefer to Table 14.3. The result of this game is known as a
A. repeated strategy. B. tit-for-tat outcome. C. collusive outcome. D. prisoners' dilemma.