The article explores the effects of different exchange rate systems on the economy in a simple model. It looks at how fixed exchange rates can affect prices and economic stability when faced with shocks. The study finds that with a passive monetary policy, a fixed exchange rate can lead to higher levels of employment and GDP. However, with an optimal monetary policy, a fixed exchange rate can actually increase employment volatility and lower GDP. This means that the impact of fixing exchange rates on the economy depends on how flexible monetary policy is in responding to economic changes.