Discuss the impotence and potency of policies under various exchange rate regimes
The Mundell-Fleming model illustrates that the power of fiscal policy and monetary depends on the exchange rate regime to influence aggregate demand. The model reflects that the effect on a small open economy of almost any economic policy depends on whether the exchange rate is fixed or floating.
Under a floating exchange rate and perfect capital mobility, fiscal policy is impotent because it is unable to increase income. However under a floating exchange rate and perfect capital mobility, monetary policy is potent because it allows huge cash outflow and improve trade balance.
Under fixed exchange rates monetary policy is impotent because not influence aggregate income. Any attempt for the expansion of the supply of money is futile, because the money supply have to adjust to ensure that the exchange rate remains at its announced level. However a nation with fixed exchange rates may conduct a type of monetary policy by deciding at which the exchange rate is fixed for changing the level. Any increase in the value is termed revaluation and reduction in the official value of the currency is termed devaluation.
Discuss the impotence and potency of policies under various exchange rate regimes
Discuss the pros and cons of supporting the fixed exchange rate regimes in developing countries
a. Outline the differences in the exchange rate regimes in China and in the US. [6 MARKS] b. China recently devalued the Yuan. Explain why the Chinese government adopted this policy. What do you expect would happen to China's balance of payments? [6 MARKS]
Assess the impossible trinity concept in the context of the fixed/flexible exchange rate regimes. (PLEASE ANSWER THOROUGHLY AND IN DEPTH)
Debate the relative merits of fixed and floating exchange rate regimes. From the perspective of an international business, what are the most important criteria in a choice between the systems? Which system is the more desirable for an international business?
discuss how the exchange rate policies of the dominant economies in the three regions (SADAC, AEC, and COMESA) have affected crossborder trade. Substantiate your discussion with examples.
Discuss different policies of currency valuation and strategies for mitigating exchange risk.
1. Using the Mundell-Fleming model, describe the effects of: (a) A fiscal expansion under fixed and flexible exchange rate regimes (30 per cent of marks) (b) A monetary expansion under fixed and flexible exchange rate regimes (30 per cent of marks) (c) An increase in the world interest rate under fixed and flexible exchange rate regimes (40 per cent of marks)
Briefly discuss the following; (a) Staffing Policy (b) The various types of Human Resource Staffing Policies
What is the trilemma for exchange rate and monetary policies for an open economy? Explain the pros and cons of a fixed exchange rate system. PLEASE BE THOROUGH WHEN ANSWERING THE QUESTION AND EXPLANATION
Discuss the arguments that favor a floating exchange rate system against a fixed exchange rate system. Present the common arguments that favor fixed exchange rates. Give specific examples to illustrate your comprehension and application of the topic.