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Exchange Rates.

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Discussion 2: “Exchange Rates.” Please 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?
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