Floating and Fixed Exchange Rates- Macroeconomics

Mr. Clifford explains the differences between floating and fixed exchange rates. Floating rates fluctuate with market forces, while fixed rates are controlled by governments to maintain a specific value. The choice between these systems depends on a country's trade activities. He discusses how businesses must monitor exchange rates to avoid financial losses. The video also covers methods governments use to fix exchange rates, such as adjusting interest rates, buying foreign currency, and implementing foreign exchange controls. Real-world examples of countries with different exchange rate systems are provided.

What is the significance of monitoring exchange rates for businesses involved in international trade?

How does the government manipulate the market to set exchange rates?