Economics Question

While Saudi Arabia seeks to diversify its economy, the Saudi economy is dominated by the petroleum sector. In addition, the Saudi Arabian Riyal (SAR) is pegged to the U.S. Dollar. For this week’s discussion, please answer the following questions: 

What are the advantages and disadvantages of the pegged exchange rate? 

Analyze the effect on the economy of Saudi Arabia (GDP, interest rates, inflation, and trade balance) given two scenarios when there is a dramatically declining world oil price or a dramatically increasing world oil price.

• Directions:
• Your essay is required to be four to five pages in length, which does not include the title page and reference pages, which are never a part of the content minimum requirements.

Support your submission with course material concepts, principles, and theories from the textbook and at least three scholarly, peer-reviewed journal articles, it should be new and updated from 2020 and above.