Question
In 1997, Thailand fixed the spot exchange rate (TB/US$) of the Thai Baht (TB) at an overvalued level versus the U.S. dollar (US$). Assume that
In 1997, Thailand fixed the spot exchange rate (TB/US$) of the Thai Baht (TB) at an overvalued level versus the U.S. dollar (US$). Assume that there were no restrictions on capital flows. Specify business cycle AND financial system conditions in BOTH Thailand and the United States under which it would be most difficult to maintain the overvalued TB/US$ exchange rate. EXPLAIN WHY.
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Financial Management Principles and Application
Authors: Arthur J. Keown, J. William Petty, David F. Scott, Jr.
10th edition
