Question: 3 Floating vs. Fixed Exchange Rates (10 Points) a. (3 Points) Discuss the costs and benefits of having a fixed exchange rate regime. b. (3

3 Floating vs. Fixed Exchange Rates (10 Points)

a. (3 Points) Discuss the costs and benefits of having a fixed exchange rate regime.

b. (3 Points) Discuss the costs and benefits of having a flexible exchange rate regime.

c. (4 Points) State the three policy objectives that central banks can pursue. Provide an example for each possible exchange rate regime. Additionally, state which policy objective the regime sacrificed in order to achieve the other two.

ONLY NEED TO ANSWER PART C. Thx a lot, tutors.

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