Compare and Contrast a Pegged Exchange System and a Dirty

question 80

Essay

Compare and contrast a pegged exchange system and a dirty float system of exchange rates.

---

Definitions:

Government Intervention

Actions taken by the government to influence or directly control economic or market conditions.

External Costs

Costs incurred by third parties who are not involved in a transaction, often leading to market failure if not properly accounted for.

Perfect Information

A market condition where all participants have complete and identical information about the product, including its price and quality.

Minimum Imposed Price

An external intervention (usually by the government) to set a price floor, preventing the market price from falling below a certain level.