Define Managed floating rate system
Managed floating rate system: This is a system in which foreign exchange rate is found out by market forces and central bank is a key contributor to stabilize the currency in condition of tremendous appreciation or depreciation.
State the two sources of demand of foreign exchange: Import of services and goods and to acquire education in abroad.
Assume that El Salvador can generate coffee at lower opportunity costs than Spain, whereas Spain can generate olive oil at lower opportunity costs than El Salvador. The citizens of both countries can potentially profit from international trade since of the efficiency
Balance of payment Accounts: It is the systematic record of all economic transactions among the residents of a country and rest of the world in a specified period (1-year) of time.
Describe which of the following is a visible and which is invisible item in Balance of payments. (a) Export of jute product (b) Software services exports. Answer: Q : Define flexible exchange rate Flexible Flexible exchange rate: The rate of exchange in terms of other currencies is determined by market forces of demand-supply.
Flexible exchange rate: The rate of exchange in terms of other currencies is determined by market forces of demand-supply.
Let us suppose that US gasoline market has the demand and supply curvesQd = 10 – 0.5PdQs = -2 + Ps when Ps ≥ 2 and Qs = 0 if Ps < 2, Q : Must home production be defended to Examining US–Canadian imports-exports and analyzing a call to protect the US lumber business.
Examining US–Canadian imports-exports and analyzing a call to protect the US lumber business.
Fixed exchange rate system (or pegged exchange rate system): This is a system in which exchange rate of a currency is fixed by government. This system makes sure stability in the foreign trade and capital movement.
Fixed exchange rate: It is the rate of exchange which is fixed by the Government in an economy.
Induced investment: It is a type of investment that is of profit motive in nature.
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