The reading argues that a primary reason for exchange rate controls is that:
they increase the power of the government. poor nations do not have the expertise to organize markets. only by controlling the exchange market can a poor nation guarantee that foreign exchange is used for economic development. the industrial powers force the rest of the world to use this system.
When a country allows private buyers and sellers to determine the price of its currency in the foreign exchange market, it has a system of:
an adjustable pegged rate. fixed but convertible exchange rates. fixed but nonconvertible exchange rates. floating exchange rates.
