Assume that Malaysia has a trade account balance and trades only with the United States of America. Let's further assume that productivity growth in Malaysia resulted in an increased domestic income. Explain the effects of the increased productivity growth in Malaysia on the market for the US dollar if Malaysia adopts a fixed exchange rate system. Briefly explain what the Malaysian government should do to maintain the exchange rate fixed at the initial level.
(12 marks)

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07-06-2024
Business

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Assume that Malaysia has a trade account balance and trades only with the United States of America. Let's further assume that productivity growth in Malaysia resulted in an increased domestic income. Explain the effects of the increased productivity growth in Malaysia on the market for the US dollar if Malaysia adopts a fixed exchange rate system. Briefly explain what the Malaysian government should do to maintain the exchange rate fixed at the initial level.
(12 marks)

Sagot :

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