Explain the Basic Difference in a fiXed (Or Pegged) Exchange

question 223

Essay

Explain the basic difference in a fixed (or pegged) exchange rate policy as opposed to a flexible
exchange rate policy.

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Definitions:

Total Revenue

The entire amount of income generated by the sale of goods or services by a company before any expenses are deducted.

Fixed Costs

Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance premiums.

Variable Costs

Costs that change in proportion to the level of goods or services that a business produces.

Profit

The financial gain realized when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes involved in sustaining the activity.