--%>
Assignment Help - homework help

Freely Floating Currency

Question:

For a freely floating currency, currency i.____________________ occurs when the market value of a country's currency rises relative to the value of another country's currency, while currency ii._____________________ occurs when the market value of a country's currency declines relative to value of another country's currency. ii. Briefly Explain?

Answer:

(i)    Appreciation

(ii)   Depreciation

(iii)  Market value of a currency is determined by its demand and supply, in a free currency movement model. Therefore, given the fixed supply in the short run, a rise in value means that the demand is increasing, thereby increasing the price of the currency. This price increase, measured in terms of other currency, leads to appreciation of the currency. Opposite happens in the case of depreciation.

 

 

   Related Questions in Business Economics

  • Q : Local expenditures and receipts for all

    Elucidate the Local expenditures and receipts for all local governmental units in 1996?

    		•
  • Q : External costs and external benefits

    Explain the impact of external costs and external benefits on resource allocation

    		•
  • Q : Rivalry for various types of resources

    Intermediaries ultimately prosper only when they give a service of decreasing: (1) demand for a good (2) prices paid to manufacturers of a good. (3) transaction costs. (4) rivalry for various types of resources. (5) cut-throat competition into markets

    		•
  • Q : Major players in international trade

    Who are the major players in international trade today?  Besides Japan, what other Asian nations play significant roles in international trade?

    		•
  • Q : Describe cost of equity shares Briefly

    Briefly describe cost of equity shares? And also write down way to evaluate the cost of equity shares?

    		•
  • Q : Define the Legal forms of businesses

    Define the Legal forms of businesses?

    		•
  • Q : Resources of private Capitalism I have

    I have a problem in economics on Resources of private Capitalism. Please help me in the following question. The Private individuals own most resources and find out how they will be employed in an economic system of: (1) Socialism. (2) Capitalism. (3)

    		•
  • Q : Importance of rationally optimal

    Economic scarcity is pervasive, that makes choices essential. Therefore, rationally optimal decisions hinge upon tradeoffs which essentially reflect: (i) cooperation to minimize human greed. (ii) opportunity costs. (iii) competitive social behavior. (

    		•
  • Q : Introduction of the term Control Factor

    Give a brief introduction of the term Control Factor?

    		•
  • Q : Technology in production Drawing a

    Drawing a production possibilities frontier needs the supposition that: (1) Decision makers encompass discretion over resource accessibility. (2) Technology is constant. (3) Income is fairly distributed. (4) Resources are considerably diverse. (5) At least three goods

    		•