Changes in the value of a nation’s currency affect the nation’s net exports, and thus GDP. How might this make a large country, like the U.S., more willing to adopt a flexible exchange rate regime than a small country, like Belgium?
|Why do large countries, like the U.S., typically have a lower portion of their GDP as exports and imports, than a small country like Belgium?||4|
|How does the size of a nation’s trade sector affect the stability of its GDP?||3|
|How do exchange rate fluctuations affect a nation’s GDP?||4|
|Why might a large country be more willing to adopt a flexible exchange rate than a small country would?||6|
|Write up your analysis using correct language, explaining all your work||3|