Problem
A. Saudi Arabia has a fixed exchange rate regime; how does this regime affect Saudi's economy? Its monetary policy and freedom of capital? Explain how would the Saudi Central Bank deal with business cycle (recession, high inflation, or a combination like what we are experienced right now) and whether floating exchange rate regime would be a better choice?
B. There was an agreement on 1944 between forty-four countries (Bretton Woods agreement) to fix all currencies with the USD and the USD to gold as a result of fluctuation on many of the major currencies after World War 2. Later on, the US president Nixon declared banding gold standard on 1971 and let the USD and other currencies to fluctuate with each other. Would you considerthis policy declared by president Nixon as a good one? What is the effect of this policy on the MNE up until now (especially with today's global recession)?