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When a country adopts a fixed exchange rate regime, what is that the country has to give up (trade off)?
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- What is the effect on a country’s economy of an artificially lowexchange rate? Of an artificially high exchange rate?What is that determines the relationship between spot abd forward foreign exchange rates?Why the single currency eliminates exchange rate fluctuation and why is better for the countries to use the a common currency?
- What is the effect of external transfers from expatriate employment on maintaining the stability of the exchange rate on the country.Do remittances happen to stabilize the exchange rate?Explain the managed floating exchange rate regime. How can the monetary authorities prevent effects of these exchange rate regime on money supply level and why the most of the emerging countries prefer to use this policy?Which of the following statement is NOT true regarding the spot rate and forward rate? a. Forward rate can be calculated using the spot rate, the interest rate for domestic investment, and the foreign investment interest rate. b. Forward rate should be higher than the spot rate at the beginning of a forward contract. c. Forward rate is the rate of exchange at a future point in time. d. Spot rate is the current rate of exchange.