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?’
Expert
Because of the consequence on demand and supply of currency and the new equilibrium. It distinguishes among real and nominal values.
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
Deficit in balance of trade point: Deficit in balance of trade points out that the imports of good are bigger than exports.
Who won the Nobel Prize for Economics in 1997?
In simple circular flow model, the only entities which finally consume goods, own resources, pay taxes or bear the loads of inflation, experience joy, or suffer pain, are as: (i) corporations. (ii) Households. (iii) Government agencies. (iv) Business
When Balance of payment of a country is Rs (-) 100 crores and total payment are Rs 500 crores. Determine its total receipts.
Explain how foreign exchange rate is determined beneath flexible exchange rate system. Beneath flexible exchange rate system, the equilibrium exchange rate is found out where demand for foreign exchange is equival
Managed floating exchange rate: This is a system in which the central bank or Government permits the exchange rate to identify market forces although they take decisions to intervene whenever they feel it suitable.
Which transactions- autonomous or accommodating carry balance in BOP? Answer: Accommodating transactions carry balance in the BOP or balance of payment.
Flexible exchange rate: The rate of exchange in terms of other currencies is determined by market forces of demand-supply.
Assume that many people are willing and capable to pay greater than production costs for certain goods however pervasive shortages exist. International agreements or domestic laws and policy are most likely key factors if we consider sustained scarcities in ma
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