A fixed exchange rate is when a country ties the value of its currency to some other widely-used

commodity or currency. The dollar is used for most transactions in international trade. Today, most
fixed exchange rates are pegged to the U.S. dollar. Countries also fix their currencies to that of their
most frequent trading partners.

In the past, currencies were fixed to an ounce of gold. In the 1944 Bretton Woods Agreement,
countries agreed to peg all currencies to the U.S. dollar. The United States agreed to redeem all
dollars for gold. In 1971, President Nixon took the dollar off of the gold standard to end the
recession. Still, many countries kept their currencies pegged to the dollar, because the dollar is the
world's reserve currency. Nixon's action ended the 200-year history of the gold standard.

A fixed exchange rate tells you that you can always exchange your money for the same amount of
the other currency. It allows you to determine how much of one currency you can trade for another.
For example, if you go to Saudi Arabia, you know the dollar will buy you 3.75 Saudi riyals, since the
dollar's exchange rate in riyals is fixed. Saudi Arabia did that because its primary export, oil, is priced
in U.S. dollars. All oil contracts and most commodities contracts around the world are written and
executed in dollars.

Definition of managed float

Also known as a dirty float. When a monetary authority allows a currency to float - that is allowing
its exchange rate to move up or down depending on supply and demand in the foreign exchange
market - but still intervenes in the market to ensure the exchange rate does not move beyond
undeclared official limits.

Black Market

A market for products that are illegal, stolen, or otherwise need to be hidden from regulatory
authorities. A black market encompasses the horrific (e.g. human trafficking) as well as the more
mundane (e.g. participating in the market to evade taxes). Legal products on a black market are
usually less expensive than on the regulated market because sellers do not pay taxes on their goods
and services. That said, there is little or no recourse for the customer if and when a black market
product fails. It is worth noting that black markets tend to be largest in jurisdictions where there are
the most regulations and government monopolies. It is also known as an underground market

Definition: Corporation tax is a tax imposed on the net income of the company.