62. Which two of the following would tend to increase the supply of sterling on the foreign exchange market? Select one: O a. Increased demand for imports into the UK b. Reduction in aid by the UK government to developing economies O c Increased inflows of foreign currencies into sterling deposit accounts in the UK d. Increased demand for exports from the UK

62. Which two of the following would tend to increase the supply of sterling on the foreign exchange market? Select one: O a. Increased demand for imports into the UK b. Reduction in aid by the UK government to developing economies O c Increased inflows of foreign currencies into sterling deposit accounts in the UK d. Increased demand for exports from the UK

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter29: Exchange Rates And International Capital Flows

Section: Chapter Questions

Problem 2SCQ: Suppose that political unrest in Egypt leads financial markets to anticipate a depreciation in the...

See similar textbooks

Similar questions

How can an unexpected fall in exchange rates injure the financial health of a nations banks?
Suppose that political unrest in Egypt leads financial markets to anticipate a depreciation in the Egyptian pound. How will that affect the demand for pounds. supply of pounds, and exchange rate for pounds compared to, say, U.S. dollars?
What are some of the reasons a central bank is likely to care, at least to some extent, about the exchange rate?
What is the difference between a floating exchange rate, a soft peg, a hard peg, and dollarization?
Suppose Argentina gets inflation under control and the Argentine inflation rate decreases substantially. What would likely happen to the demand for Argentine pesos, the supply of Argentine pesos, and the peso/U.S. dollar exchange rate?
This chapter has explained that one of the most economically destructive effects of exchange rate fluctuations can happen through the banking system, if banks borrow from abroad to lend domestically. Why is this less likely to be a problem for the U.S. banking system?
What is the foreign exchange market?
A booming economy can attract financial capital inflows, which promote further growth. However, capital can just as easily flow out of the country, leading to economic recession. Is a country whose economy is booming because It decided to stimulate consumer spending more or less likely to experience capital flight than an economy whose boom Is caused by economic investment expenditure?
A central bank can allow its currency to fall indefinitely, but it cannot allow its currency to rise indefinitely. Why not?
Do you think that a country experiencing hyperinflation is more or less likely to have an exchange rate equal to its purchasing power parity value when compared to a country with a low inflation rate?