StudyGPT Just Leveled Up – Say Hello to Knowee! 🚀
Knowee
Questions
Features
Study Tools

A fixed exchange rate  work better for countries that already have a stable and effective monetary policy.

Question

🧐 Not the exact question you are looking for?Go ask a question

Solution

A fixed exchange rate system can indeed work better for countries that already have a stable and effective monetary policy. Here's why:

  1. Stability: A fixed exchange rate provides stability in the value of a currency. This is beneficial for countries with stable monetary policies as it reduces the risk of currency fluctuations and encourages international trade and investment.

  2. Predictability: With a fixed exchange rate, businesses and investors can make decisions with the certainty of knowing the value of a currency. This predictability can help to foster economic growth.

  3. Inflation Control: A fixed exchange rate can help to control inflation. If a country's currency is pegged to a low-inflation currency, it can help to import the low inflation rate from the foreign country.

  4. International Confidence: A fixed exchange rate can boost international confidence in a country's economy, especially if it's pegged to a strong and stable

This problem has been solved

Upgrade your grade with Knowee

Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.