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.
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
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
Demand for foreign exchange is prepared to: (A) Purchase services and goods (B) Send gifts and funding(C) Speculate the value of foreign currencies, (D) Invest and procure financial assets
State the items that are not involved in the current account of India’s Balance of payment. Answer: The capital transactions is in the form of direct and portf
I NEED TO UNDERSTAND MORE ABOUT PRODUCTION POSSIBILITY FRONTIER
Fixed exchange rate: It is the rate of exchange which is fixed by the Government in an economy.
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
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
Autonomous or public investment: It is a type of investment that is not of profit motivated.
Determine the factors accountable for inflow of foreign currency? Answer: a) Foreigners buying home country services and goods via exports. b) Foreigners investment in home country via joint ventures and via
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