What type of exchange rate regime is the U.S. under? Give an example of a country that has a fixed rate. What disadvantages does a fixed rate regime have?

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The Answer is The U.S. has a managed float system. An example of a fixed rate regime is the Bahamas, which has a fixed rate with the U.S. dollar. Advantages are U.S. tourists have an easy time visiting the Bahamas with a fixed rate with the U.S. dollar. Disadvantages are that the country depends on the U.S. dollar with their currency fluctuating in value with the U.S. dollar which is out of their control, and to keep the rate fixed the central bank has to buy or sell foreign reserves which can affect the currency in circulation for the country. If the central bank runs out of currency, it may have to engage in a devaluation, which results in a loss of confidence in the currency, which can contribute to an economic downturn.

What Type of Exchange Rate Regime Is the U