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A small country whose economic growth heavily dependent trade with

Question : A small country whose economic growth heavily dependent trade with : 148582

A small country whose economic growth is heavily dependent on trade with the United States is considering several exchange rate regimes that would best serve in their economic interest. They are most concerned about the unfavorable impact of exchange rate risk on their trade. They are also concerned about inflation and they would like to adopt a currency regime that is inherently anti-inflationary. Which one of the following regimes would be most suitable for this country provided that this is the only information you have.

 

A.

managed float

 

B.

A peg against Euro

 

C.

freely floating exchange rate

 

D.

A peg against USD

 

Solution
5 (1 Ratings )

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