Discussion: "Exchange Rates"
Respond to the following:
• Explain how countries manipulate their foreign exchange rate against specific other currencies. In your opinion, is this an economically beneficial strategy for a government to follow? Should the United State pursue this type of strategy? Why or why not?
• In a flexible-exchange-rate system, a country such as Brazil that has a persistently high inflation rate will experience regular depreciation of its nominal exchange rate with the U.S. dollar. Explain why this happens. Why might the Brazilian government like this system?