Chapter 22: Problem 13
What is an optimal currency area?
Chapter 22: Problem 13
What is an optimal currency area?
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Get started for freeWhat does it mean to say that the U.S. dollar has depreciated in value in relation to the Mexican peso? What does it mean to say that the Mexican peso has appreciated in value relative to the U.S. dollar?
If everyone in the world spoke the same language, would the world be closer to or further from being an optimal currency area? Explain.
What does it mean to say that a currency is overvalued? undervalued?
A country whose currency is the primary reserve currency can likely borrow at lower interest rates than it could if its currency were not the primary reserve currency. Do you agree or disagree? Explain.
What are the strong and weak points of the flexible exchange rate system? What are the strong and weak points of the fixed exchange rate system?
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