--%>
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 : 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 : Explain Shut Down Price Explain the

    Explain the term Shut Down Price? Illustrate it.

    		•
  • Q : Steps to analyze modifications in

    What are the Steps to analyze modifications in equilibrium?

    		•
  • Q : Difference between

    Elucidate the differences among the frictional, structural, and cyclical forms of unemployment.

    		•
  • Q : How Bank rates control the credit How

    How Bank rates control the credit? Answer: Bank rate is the rate of interest at which the Central bank lends to Commercial banks. By increasing the bank rate centra

    		•
  • Q : Control of Inflation Economists agree

    Economists agree that inflation beyond a moderate rate is undesirable as it can often prove disastrous and therefore, it must be kept under control. Economists agree also that an appropriate mix of fiscal and monetary policies can be helpful in controlling inflation.

    		•
  • Q : Liability of tax problem If the

    If the liability to give a tax is on one person and the burden of tax fall on some other person, state the kind of tax? Answer: These are indirect taxes like sales

    		•
  • Q : Principles of macroeconomics Explain

    Explain the concept of “economies of scale” and “increasing returns”.

    		•
  • Q : Demand curves when longer periods are

    Whenever longer periods are considered and hence bigger ranges of adjustments (that is, substitutions) become probable, demand curves tend to become: (i) Flatter, and therefore do supply curves. (ii) Flatter, as supply curves become steeper. (iii) Ste

    		•
  • Q : Equal Marginal advantage law Assume

    Assume that you receive $18 worth of “jollies” (that is, satisfaction, utility or pleasure) from the very first hole of golf played on a particular day, and that your extra jollies from succeeding holes drops $1 for each and every hole played. You should p

    		•