Discussion:
"Government Impact on Exchange Rates" Please respond to the following:
1.) From the first case study, imagine a situation where the Thai government has decided to peg the Thai Baht to the U.S. dollar. Predict the major effects that such a peg could have on the U.S.'s level of inflation and the level of exports or imports to and from Thailand. Determine the fundamental manner in which a fixed exchange rate affects companies such as Blades.
2.) From the second case study, analyze the major advantages and disadvantages associated with a floating exchange rate system in Thailand. Determine the central manner in which a floating exchange rate system affects companies such as Blades. Provide a rationale for your response.
3.) Why do countries peg their currencies to the dollar class?