Please, write a discussion post about the Topic/Statement below (500 words) Topic/Statement: Debate...

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Please, write a discussion post about the Topic/Statement below (500 words)
Topic/Statement: Debate the relative pros and cons of a fixed V a floating exchange rate system. From the perspective of a multinational business, what are the most important criteria in a choice between them? Explain your answer in a clear and concise manner.
(2 or 3 Citations needed for this discussion post)
Citation sources (Please use any of the below citation sources for the initial discussion):
Thiessen, G XXXXXXXXXXWhy a Floating Exchange Rate Regime Makes Sense for Canada. Retrieved 22 July 2018, from https:
www.bankofcanada.ca/2000/12/why-a-floating-exchange-rate
Wiseman, P XXXXXXXXXXFact check: Does China manipulate its cu
ency?. Retrieved 22 July 2018, from https:
www.pbs.org/newshou
world/fact-check-china-manipulate-cu
ency
Amadeo, K XXXXXXXXXXHow China Influences the U.S. Dollar: Its Influence Is Hidden and Powerfull Retrieved from https:
www.thebalance.com/how-does-china-influence-the-u-s-dollar XXXXXXXXXX
How Does China Control Exchange Rates? (2018). Retrieved from https:
www.fxcm.com/insights/how-does-china-control-exchange-rates
Wallace, C. (2018). China's Cu
ency Manipulation Is A Response to Trump's Tariffs. Retrieved from https:
www.fo
es.com/sites/charleswallace1/2018/07/21/chinas-cu
ency-manipulation-is-a-response-to-trumps-tariffs/#7a922fa2663
Coy, P. (2017, October 20). Floating Exchange Rates Can Cause Big Trouble. Retrieved from https:
www.bloomberg.com/news/articles/ XXXXXXXXXX/floating-exchange-rates-can-cause-big-trouble.
Difference between Fixed vs. Flexible Exchange Rate System. (2015, August 18). Retrieved from http:
www.economicsdiscussion.net/difference-between/difference-between-fixed-vs-flexible-exchange-rate-system/617.
Lewis, N. (2016, November 07). Fixed Or Floating? Maybe Our Monetary Choice Is That Simple. Retrieved from https:
www.fo
es.com/sites/nathanlewis/2016/11/07/fixed-for-floating-maybe-our-monetary-choice-is-that-simple/#19af55d83b89.
Fixed Exchange Rate. (2018, April 30). Retrieved from https:
www.investopedia.com/terms/f/fixedexchangerate.asp
What is best for international business: Fixed or Floating Exchange Rate Regime? (Fe
uary , XXXXXXXXXXRetrieved from https:
uildandbattle.wordpress.com/2013/02/04/what-is-best-for-international-business-fixed-or-floating-exchange-rate-regime
What is floating exchange rate? definition and meaning. (n.d.). Retrieved July 18, 2018, from
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www.businessdictionary.com/definition/floating-exchange-rate.html
Davidson, P XXXXXXXXXXAre fixed exchange rates the problem and flexible exchange rates the cure? Eastern Economic Journal, 29(2), 259. Retrieved from https:
saintleo.idm.oclc.org/login?url=https:
search-proquest-com.saintleo.idm.oclc.org/docview/ XXXXXXXXXX?accountid=4870
Kenen, P. B XXXXXXXXXXFixed versus floating exchange rates. Cato Journal, 20(1), XXXXXXXXXXRetrieved from https:
saintleo.idm.oclc.org/login?url=https:
search-proquest-com.saintleo.idm.oclc.org/docview/ XXXXXXXXXX?accountid=4870
Gagnon, J., & Hinterschweiger, M. (2011). Flexible exchange rates for a stable world economy. Washington, DC: Peterson Institute for International Economics

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Alomita · Accepted Answer

ADVANTAGES AND DISADVANGATES OF THE  EXCHANGE RATE SYSTEM WITH THE HELP OF THE CHINESE ECONOMY:
 Under fixed exchange rate system, policymakes  faces a potential conflict in achieving domestic targets and maintaining equilibrium in the balance of payments. A major advantage claimed for the flexible exchange rate is that it affords full protection against shocks originating abroad. Suppose that there is a recession abroad that reduces foreign income. Fall in income induces a fall in foreign country’s imports , which is the same as a decline in the home exports. This decline leads to a fall in the supply of foreign exchange and the deficit will be corrected through a fall in the price of the home currency. Now, instead the exchange rate were kept fixed, the exogenous fall in exports would cause home currency to fall through the foreign trade multiplier. Thus, the recession abroad will have a contradictory effect on the domestic economy in a rigid exchange  rate and under floating system , the home economy is completely insulated against a wide variety of external shocks. 
Considering the case of the Fixed exchange rate system , it do have certain advantages in certain situations . Fluctuations in the exchange rate introduce a large element of uncertainty in production and investment plan of firms. This is the exchange rate risk of the foreign trade.

Please, write a discussion post about the Topic/Statement below (500 words) Topic/Statement: Debate the relative pros and cons of a fixed V a floating exchange rate system. From the perspective of a...

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