How does a “fixed” exchange rate—say five u.s. dollars for one


1. How does a “fixed” exchange rate—say five U.S. dollars for one British pound—remove the risk in international trading that exists when the exchange rate fluctuates according to the supply and demand for dollars and pounds?

2. Could you notice the presence of growing globalization, even if you had never heard the word, from what you see in ads or in shops? Can you mention a few examples, say in automobiles, food, or clothing?

 3. Can you explain why a concerted effort on the part of people who buy or sell foreign exchange can threaten the solidity of a whole nation’s economy? If you were a Mexican businessperson who needed to import zippers from the United States to manufacture sportswear, which you then exported to Europe, can you explain why a collapsing peso would make business very difficult, or even impossible

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