ECON 164

Q1. Answer the following questions: (a) Explain the costs and benefits of fixed and floating exchange rates? (b) How do modern central banks like the Reserve Bank of India (RBI) try to manage these trade-offs through following a \"managed float\" as the basis for exchange rate policy? {c) The RBI's ability to implement a \"managed float\" exchange rate strategy has increased significantly from 1991 to 2011. What is the main change in the conditions of the Indian economy since 1991 that has made this possible? What is the cost of this strategy