Question: Consider the following three exchange-rate systems: the classical gold standard, freely flexible exchange rates, and the Bretton Woods system. Compare and contrast the three systems

Consider the following three exchange-rate systems: the classical gold standard, freely flexible exchange rates, and the Bretton Woods system. Compare and contrast the three systems with respect to the following characteristics:

a. Role of government vs. market in determining exchange rates

b. Degree of exchange-rate volatility

c. Method of adjustment of relative prices across countries

d. Need for international cooperation and consultation in determining exchange rates

e. Potential for establishment and maintenance of severe exchange-rate misalignment

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a The fixed exchange rate that is the classical gold standard is the rate fixed by the government of the country to convert the countrys currency into ... View full answer

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