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Open Economy Macroeconomics
Question
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Explain the meaning of (i) Crawling Peg, and (it) Managed floating.

Answer

(i) A Crawling peg is a compromise between fixed and flexible exchange rates. According to it a country specifies a parity value for its currency and permits a small variation (such as +1%) from that parity.
(ii) Managed floating is a hybrid of fixed and flexible exchange rates. It is characterised by some intervention in exchange rate movement by monetary authorities but intervention is discretionary.

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Some More Questions From Open Economy Macroeconomics Chapter

What is balance of trade? 
or
Which two transactions determine BOT?
or
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When is there deficit in BOT?
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