--%>

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 : Who was 1970 Nobel Laureate in Economics

    Who was 1970 Nobel Laureate in Economics?

  • Q : Calculating value of imports Calculate

    Calculate the value of imports, if the net imports are of Rs 160 crores and the value of exports are of Rs 400 crores.

  • Q : International product life cycle I NEED

    I NEED TO UNDERSTAND MORE ABOUT International product life cycle

  • 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 : Financial crisis in United States

    Question 1: The financial crisis that hit the United States first and then the world economy starting in fall 2007 meant that the future prospects of many firms looked gloomy at best for some time. Comment on the e

  • Q : Tourism services to tourist-Balance of

    In which account of balance of payment tourism services to tourist are involved? Answer: Tourism services to tourist are comprised in current account of Balance of

  • Q : What is managed floating exchange rate

    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.

  • Q : System characterization of US 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

  • Q : Visible and invisible item Describe

    Describe which of the following is a visible and which is invisible item in Balance of payments. (a) Export of jute product (b) Software services exports. Answer:

    Q : Indian economic what are the key

    what are the key callenges to indian economic development