Multiple Select QuestionSelect all that applyBroadly speaking, if the United States had a fixed exchange rate with Mexico, what steps could the United States take to help maintain the exchange rate?Multiple select question.Discourage imports from Mexico to the United StatesPlace tariffs on goods exported from the United States to MexicoEncourage exports from the United States to MexicoSubsidize the importing of goods from Mexico to the United States
Question
Multiple Select QuestionSelect all that applyBroadly speaking, if the United States had a fixed exchange rate with Mexico, what steps could the United States take to help maintain the exchange rate?Multiple select question.Discourage imports from Mexico to the United StatesPlace tariffs on goods exported from the United States to MexicoEncourage exports from the United States to MexicoSubsidize the importing of goods from Mexico to the United States
Solution
The steps that the United States could take to help maintain the exchange rate with Mexico, if it had a fixed exchange rate, could include:
-
Encourage exports from the United States to Mexico: By increasing exports, the demand for the US dollar would increase in Mexico, helping to maintain the exchange rate.
-
Discourage imports from Mexico to the United States: By reducing imports, the supply of Mexican pesos in the US would decrease, which would help maintain the exchange rate.
The other two options, placing tariffs on goods exported from the United States to Mexico and subsidizing the importing of goods from Mexico to the United States, would not help maintain the exchange rate. Placing tariffs on exports would discourage trade and potentially harm the exchange rate, while subsidizing imports would increase the supply of pesos in the US, which could also harm the exchange rate.
Similar Questions
Multiple Select QuestionSelect all that applyWhich of the following are ways for the United States to directly control the flow of trade and finance in order to maintain fixed exchange rates?Multiple select question.Creating subsidies for certain U.S. exportsAdjusting interest rates by raising or lowering the money supply.Imposing new tariffs or import quotasLevying special taxes on the interest and dividends U.S. investors receive from foreign investmentsIncreasing consumption of all goods
Multiple Select QuestionSelect all that applyThe North American Free Trade Agreement went into effect in 1994 and effectively merged Canada, the United States, and Mexico into one market by implementing what three measures?Multiple select question.Creating new tariffs and quotas among NAFTA member nationsMaking it easier for businesses to invest in the other member countriesProviding intellectual property protectionsEliminating Central American countries as trading partners for the United States, Canada, and MexicoEliminating virtually all tariffs on good produced and traded among the three member nations
Multiple Select QuestionSelect all that applyWhich of the following are characteristics of the current exchange-rate system?Multiple select question.Exchange rates are allowed to float up and down.Exchange rates are fixed.Exchange controls are regularly used.Nations occasionally use currency intervention.
Multiple Select QuestionSelect all that applyCritics of exchange controls argue that they do which of the following?Multiple select question.Create flexible exchange ratesCreate black marketsDistort international tradeLimit consumer choice
Multiple Select QuestionSelect all that applyWhich of the following are arguments in favor of the managed-float system of exchange rates?Multiple select question.World trade has grown significantly under such a system.The excessive volatility increases the prosperity of economies that rely heavily on exports.It has survived global economic problems that might have caused a fixed-rate system to break down.It is more of a "nonsystem."
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.