Describe the type of international monetary system that is currently in use. What advantages do proponents of this type of system cite in support of its use? What disadvantages do its opponents cite?
The international monetary system currently in use is described as a managed flexible exchange rate system, or managed float. This is primarily a flexible system where the forces of supply and demand for the currencies determine the exchange rates. However, nations do periodically intervene in the foreign exchange market to adjust exchange rates. Proponents of the managed flexible exchange rate system believe that it allows nations to pursue independent monetary policies, that it solves trade problems without trade restrictions, and that its flexibility allows for easy adjustment to shocks. Opponents of this type of system believe that it promotes exchange rate volatility and uncertainty, that it promotes inflation and that it corrects trade deficits a long time after a depreciation in the currency.
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If McDonald's, Wendy's, and Burger King agree with each other not to sell hamburgers for less than $3.95 apiece, all three could be found guilty of
A) an interlocking directorship under the Clayton Act. B) price fixing under the Sherman Act. C) a deceptive business practice under the Clayton Act. D) None of the above answers is correct.
The monetary-policy framework called inflation targeting is used explicitly by
a. no major country. b. most major countries except the United States and Japan. c. the United States, but it is not used by other major countries. d. most major countries, including the United States and Japan.