HW # 11: PROBLEM SET Debate: Fixed Exchange Rate or Floating Exchange Rate? 1) How does a fixed exchange rate system work? Who holds the exchange rate fixed and how? Why might a country want to hold its exchange rate fixed? 2) List the arguments in favor of a floating exchange rate and the arguments in favor of having a fixed exchange rate. Which exchange rate regime should be adopted, and why? 3) What is the gold standard? How does the classical gold standard work? List the arguments in favor of and against the adoption of the Gold Standard as the world monetary system. Should the classical gold standard be reinstituted? Why or why not