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.
Explain all the approaches of Paul Samuelson.
Deficit in balance of trade point: Deficit in balance of trade points out that the imports of good are bigger than exports.
5. What are the factors responsible for the recent surge in international portfolio investment?
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 : Define foreign exchange rate Foreign Foreign exchange rate: The Foreign exchange rate is a price of foreign currency in terms of domestic currency.
Foreign exchange rate: The Foreign exchange rate is a price of foreign currency in terms of domestic currency.
Fixed exchange rate system (or pegged exchange rate system): This is a system in which exchange rate of a currency is fixed by government. This system makes sure stability in the foreign trade and capital movement.
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
Flexible exchange rate: The rate of exchange in terms of other currencies is determined by market forces of demand-supply.
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
If exchange rate of foreign currency downs or falls, its demand rises. Describe how? Answer: If exchange rate falls, an import become cheaper, demand for imports in
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