--%>
Assignment Help - homework help

How is the exchange rate influenced by inflation

‘The country has a floating exchange rate and its inflation rate is much higher than its trading partners. Why we would suppose the country’s exchange rate to deflate?’

E

Expert

Verified

Because of the consequence on demand and supply of currency and the new equilibrium. It distinguishes among real and nominal values.

   Related Questions in International Economics

  • Q : 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.

    		•
  • Q : Gasoline market-Demand and 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 : What is autonomous or public investment

    Autonomous or public investment: It is a type of investment that is not of profit motivated.

    		•
  • Q : Who rediscovered Bachelier’s thesis Who

    Who rediscovered Bachelier’s thesis?

    		•
  • Q : Determinants of market market structure

    market structure and price-output determination

    		•
  • Q : Problem regarding Comparative advantage

    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

    		•
  • Q : Accounts in Balance of Payments or BOP

    Name the accounts in the balance of payments (BOP)? Answer: a. Current account: It exhibits the imports and exports of services and goods and transfer payments.b. Capital Account: It exhibits the assets and li

    		•
  • Q : Who explained micro and macro economics

    Who explained micro and macro economics?

    		•
  • Q : Circular Flow model of a private economy

    The simple circular flow model of a private economy describes how income and resources flow among: (1) Households and business associations. (2) Corporations and government agencies. (3) Sole corporations and proprietorship (4) Business associations a

    		•
  • Q : Positive Balance of Payments I have a

    I have a problem with the satement “Things will look excellent for the US if we could just get to where we are consistently executing a positive Balance of Payments.” Can someone in short comment on this statement?  

    		•