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?’
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Because of the consequence on demand and supply of currency and the new equilibrium. It distinguishes among real and nominal values.
5. What are the factors responsible for the recent surge in international portfolio investment?
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?
Flexible (or floating) exchange rate system: This is a system in which exchange rate is found out by forces of demand and supply of the foreign currencies concerned in the foreign exchange market. There is no official interference in the foreign excha
Explain all the approaches of Paul Samuelson.
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 : Need of foreign currency Why foreign Why foreign currency or exchange is required? Answer: a) To buy services and goods from other countries. b) To send a gift abroad. c) To buy financial assets in a specific country and d) To contem
Why foreign currency or exchange is required? Answer: a) To buy services and goods from other countries. b) To send a gift abroad. c) To buy financial assets in a specific country and d) To contem
‘The pound has enhanced today on the foreign exchange market’ is a general media comment whenever the pound sterling appreciates. When the pound appreciates is it always excellent news for business and the economy?’
The U.S. economy is an instance of a system characterized by: (1) Mixture of different aspects of various economic systems. (2) Strictly decentralized the decision making process. (3) Centralized ownership of resources. (4) Political decisions regarding all allocative
Peanut butter, jelly sandwiches and tuna fish sandwiches are replacements. Assume an international agreement decreased the worldwide catch of tuna by half. The equilibrium price of grape jelly would be: (1) Increases while the equilibrium quantity is reduced. (2) Drop
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