Floating Exchange Rates! When a country experiences a sudden shock to its economy it can choose to implement a dual or multiple foreign-exchange rate system. With this type of system, a country has more than one rate at which its currencies are exchanged. However, even though a system of multiple exchange rates may sound like a viable quick-fix solution, it can have some negative consequences. Sometimes, a multiple exchange rate results in a distortion of the economy and a misallocation of resources. While floating a currency or allowing a depreciation may both seem like logical steps, many developing nations are faced with political constraints that do not allow them to devalue or float their currency. With this background, 1-which of the following countries uses the U.S dollar officially? 1- Peru, 2- Nicaragua, 3- Mexico and 4- Ecuador. 2-Which of the following African countries uses the U.S Dollar officially? 1- Mauritius, 2- Seychelles, 3- Cape Verde and 4- Zimbabwe. ANSWERS 1- Among the listed countries, Ecuador is the country that uses the U.S dollar officially. 2- Zimbabwe is the African country that uses the U.S dollar officially.
Posted: May 31st, 2016 @ 05:50:51 AM