Questions:
1. Did the intervention effort by the Thai government constitute direct or indirect intervention? Explain.
2. Did the intervention by the Thai government constitute sterilized or nonsterilized intervention? What is the difference between the types of intervention? Which type do you think would be more effective in increasing the value of the baht? Why? (Hint: Think about the effect of nonsterilized intervention on U.S. interest rates.)
3. If the Thai baht is virtually fixed with respect to the dollar, how could this affect U.S. levels of inflation? Do you think these effects on the U. S. economy will be more pronounced for companies such as Blades that operate under trade arrangements involving commitments or for firms that do not? How are companies such as Blades affected by a fixed exchange rate?
4. What are some of the potential disadvantages for Thai levels of inflation associated with the floating exchange rate system that is now used in Thailand? Do you think Blades contributes to these disadvantages to a great extent? How are companies such as Blades affected by a freely floating exchange rate?
5. What do you think will happen to the Thai baht’s value when the swap arrangement is completed? How will this affect Blades?
Instructions:
1. First you need to read the material I attach before you start to write.
2. YOU ARE REQUIRED TO ONLY USE YOUR OWN WORDS TO EXPRESS YOUR UNDERSTANDING AND THOUGHTS!
3. NO COPY FROM THE READING MATERIAL OR ANY OTHER OUTSIDE RESOURCE!
4. Correct punctuation, grammar, spelling, sentence structure, style, and word choice are important to the reader because they drastically affect perceptions of the writer’s authority and credibility.
5. Please go through the whole paper at least twice in order to revise any mistakes, typos, or careless omissions