What are the three major types of foreign-exchange systems, and how do they operate?
What will be an ideal response?
The three major types of foreign-exchange systems are the fixed exchange-rate system, the floating exchange-rate system, and the managed float exchange-rate system. A fixed exchange rate exists when the government maintains one fixed rate at which currency can be exchanged. The currency can be fixed relative to all other currencies, it can be fixed relative to a specific amount of gold (the gold standard), it can be fixed to a basket of several currencies or fixed to just one other currency (an exchange-rate peg). A floating exchange-rate is determined solely by equilibrium of demand and supply in the foreign exchange market. Under a managed float, the exchange rate is primarily determined by demand and supply in the market for foreign exchange, with occasional central bank intervention. This is also called a dirty float regime.
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The General Agreement on Tariffs and Trade focused on:
a. raising tariffs on agricultural products. b. lowering trade restrictions between countries. c. promoting full employment worldwide. d. increasing trade restrictions between countries.
A monopolistic competitor is like a monopolist in the short run in that when economic profits are
A) equal to zero, price equals marginal cost. B) equal to zero, price below marginal cost. C) greater than zero, changes in output are due to changes to plants by existing firms and there is no entry. D) greater than zero, price exceeds marginal cost.