Answer to Question #329477 in Macroeconomics for Aeman

Question

Provide a discussion in favour of fixed exchange rate regime and floating exchange rate regime

Answer 1

These experiences suggest that unless a country has substantial economic interdependence with a neighbor to which it can fix its exchange rate, floating exchange rates may be a better way to promote macroeconomic stability, provided the country is willing to use its monetary and fiscal policy in a disciplined fashion.