a. What are the five basic mechanisms for establishing exchange rates? b. How does each work? c.

Question:

a. What are the five basic mechanisms for establishing exchange rates?

b. How does each work?

c. What costs and benefits are associated with each mechanism?

d. Have exchange rate movements under the current system of managed floating been excessive? Explain.

Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...