--%>
Assignment Help - homework help

Fundamental supply and demand in foreign

Question:

Changes in currency supply and demand can be traced back to changes in fundamental supply and demand in foreign and domestic i._____________________ markets and foreign and domestic ii.________________________ markets as well as to changes in currency speculators' expectations vis-à-vis future relative value of the currency.
ii. Briefly Explain?

Answer:

The major forces determining exchange rate movements are the trade in goods and services, financial market transactions, including FDI, and the currency speculations. An increase in net exports leads to appreciation of currency, FDI or portfolio investment. Similarly, if there is speculation is that there will be an appreciation of currency, then there will be appreciation.

 

   Related Questions in Macroeconomics

  • Q : Would inflation targeting be a good

    Question: Why might it be difficult for the Fed to formally adopt inflation targeting?  Would inflation targeting be a good policy for the Fed in the present economic environment?

    Q : Value added technique for national

    What is the alternative name of value added technique of estimating national income? The alternative name of value added technique of estimating national income is production method.

    		•
  • Q : Cost of a foreign currency When cost of

    When cost of a foreign currency increases its supply too increases. Elucidate why?

    		•
  • Q : Explain about the marginalism theory

    Most economists believe such that people increase an activity when they perceive the expected additional benefits as exceeding the expected extra cost, but decrease their level of an activity whenever they believe the benefits from the last few units of the activity a

    		•
  • Q : Fundamental supply and demand in foreign

    Question: Changes in currency supply and demand can be traced back to changes in fundamental supply and demand in foreign and domestic i._____________________ markets and foreign and domestic ii.___________________

    		•
  • Q : Which things are concerned with

    Macroeconomics is mainly concerned along with all things as the: (i) decisions individuals and firms make while prices change. (ii) resource usage and technology bases of firms. (iii) levels of national employment and income. (iv) movements within the

    		•
  • Q : Shifting of market problem When this

    When this market starts in equilibrium at point e on S0D0 and then young American families rousingly “inherit” furniture as their baby-boomer parents shift into smaller retirement homes, then this market will tend to shift in the direction of: (i) point i.

    		•
  • Q : Value of MPC Why can be value of MPC be

    Why can be value of MPC be not more than one? Answer: The value of MPC will not be more than one since increment in consumption (ΔC) can’t be more than

    		•
  • Q : Where is macroeconomics mainly focus I

    I need a good answer on the topic of Economic problems. Please give me your suggestion for problem which is specified below: Macroeconomics focuses mainly on: (i) inflation, unemployment, economic growth, and other aggregate econom

    		•
  • Q : Why is tax not a capital receipt

    Illustrate, why is tax not a capital receipt?

    		•