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Question Number 1: Government can intervene directly, in forex markets, by putting the downward or upward pressure on local currency. One way of direct intervention

Question Number 1:

  1. Government can intervene directly, in forex markets, by putting the downward or upward pressure on local currency. One way of direct intervention is Sterilized and Non-Sterilized Intervention. Differentiate between the two with proper examples.
  2. Under the free floating exchange rate system, a country is insulated from the inflation of another country. Do you agree with the statement? Support your answer with logical answer.
  3. Briefly explain Bretton Wood System and provide few reasons why it collapsed?

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