a) and b) can both help to avoid currency crises

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A: Foreign exchange is a kind of trading of different national currencies or units of account. It is…

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A: In order for interest panity to hold,

Q: 1.) (a) The foreign exchange policy of country has important functions in a country's economy. The…

A: The measure that depicts measuring one currency in terms of another currency in order to maintain…

Q: 2 It is often believed that the value of the currency of some countries are too low, which gives the…

A: Exchange rate: It can be defined as the rate at which the value of the domestic countries currency…

Q: Suppose the US dollar price of a British pound is $1.50; the dollar price of a euro is $1; a hotel…

A: Exchange rate is the rate or price at which a currency can be transacted with another currency in…

Q: 4. Two small open economies, Fixed and Flex, can be described by the Mundell-Fleming model. The…

A: The Mundell–Fleming model is a macroeconomic model. It shows short run relationship between interest…

Q: Scenario: Purchasing Power Parity A car costs $30,000 in the United States and the exchange rate is…

A: Purchasing power parity is the comparing the same basket price rate between the countries.

Q: Suppose that real interest rates increase across Europe. Explain how this development will affect…

A: Higher real interest rates in Europe attract investors, that results in increased net capital…

Q: Calculating Exchange Rates Assignment Directions: Use the information in Table 1 to answer questions…

A: An exchange rate is the value of a country's currency in respect to that of another country.

Q: 29. Suppose that Foreign investors started to expect a devaluation of Home currency by Home central…

A: When the central bank aims to keep the exchange rate fixed, it actively intervenes in the foreign…

Q: 3. Consider the economy with P= 250 cn, Pr = 5 er and E= 20 cH/Cr. 3.a. Answer the real exchange…

A: PH= 250CH PF= 5CF E= 20CH/CF Real exchange rate:-                               where  PCH=…

Q: Use the DD-AA model to discuss whether or not a devaluation under a fixed exchange rate has the same…

A: Robert Mundell and Fleming wrote the theorem when there was a fixed exchange rate system. The model…

Q: Q) Who benefits from the Euro appreciation against the Canadian dollar? a. A Canadian businessman…

A: The appreciation of currency shows the increase in the value of currency while the depreciation of…

Q: an you please answer question 50, please? No explanation needed. Thanks in advance.   50) Which of…

A: Meaning of Exchange Rate: The term exchange rate refers to the situation under which a particular…

Q: 6. The rationale of Big Mac indication on the under/overvaluation of exchange rate is the fact that…

A: “Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

Q: 2.Using the general monetary model of long-run exchange-rate determination, explain the effect and…

A: The framework that asset market operators use to estimate future exchange rates is provided by the…

Q: 16. The variability of real exchange rates has been much greater when a country adopts of fixed…

A: When talking about fixed exchange rate system, it can be said that this system is given by Bretton…

Q: 4. A country has a fixed exchange rate and capital is very mobile. Because it is experiencing high…

A: The purpose of monetary policy is to keep a stable exchange rate. If a government follows a policy…

Q: 3. Assume that there is a decrease in consumer confidence in the small open economy of Economica.…

A: Consumer confidence is one of the factors that influence market confidence because a change in…

Q: In a floating exchange rate regime, which of the following alternatives should the Japanese central…

A: Floating exchange rate regime is one of the type of exchange rate systems.

Q: B. Combining Fiscal Policy and Exchange-Rate On weekdays, you are a staff member of the Council of…

A: Fiscal policy means the government plays an important role in controlling inflation or recession in…

Q: The 1-year interest rate on Euro  is 3 percent, and the dollar interest rate is 7 percent.   a) If…

A:

Q: 5. In a few sentences, explain the difference between a fixed exchange rate and a flexible exchange…

A: An exchange rate is the value of one country's currency in reference to the currency of another…

Q: Hi there . can you pease assist on the following below   Assume there has been an increase in the…

A: "Assume there has been an increase in the volume of exports from South Africa to the United States."…

Q: Suppose interest rate in Malaysia (home country) is 3% and in United States it is 2%, whereas the…

A: The interest rate in Malaysia (home country) is 3% and in United States it is 2%, whereas the spot…

Q: (2) Why do we need foreign exchange? Write a brief note on the differences between fixed and…

A: Need for foreign currency Foreign Exchange is a means of exchanging two currencies of two different…

Q: Assume that the price of the same pair of shoes is 80 Canadian dollars (CAD) in Canada, 60 euros…

A: a) Real exchange rate between Germany and Canada: Nominal exchange rate between Germany and Canada =…

Q: 2.a. Based on your expected exchange rate, not using the simple rule, answer the exact foreign rate…

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Q: Illustrate and explain the mathematical formulas used to compare currency  movement in foreign…

A: An exchange rate is the cost of converting one currency into another. Exchange rates fluctuate…

Q: Suggest how the multinational company (MNC) could reduce/eliminate the exchange rate risk

A: Exchange rate risks are because of frequent fluctuations in the exchange rate of any currency.

Q: 10) According to impossible trinity, the trade-off of maintaining fixed exchange rate regime,…

A: The impossible trinity would result in the maintaining of the fixed exchange rate, independent…

Q: 14. With flexible exchange rates, central banks do not have to finance cur- rent account deficits…

A: The rate that depicts the measurement of one currency in terms of another currency is known as the…

Q: Theoretically, how would the rise in the value of the pound affect the current account of the UK

A: Answer: Introduction: The current account of the balance of payment: the current account includes…

Q: 2. Assume that the nominal exchange rate increases by 2%. If prices (both domestic and foreign do…

A: Given: Nominal exchange rate increases by 2%.  Domestic Price remains constant. Foreign Price…

Q: Suppose that real interest rates increase across Europe.Explain how this development will affect…

A: Through increasing the net capital outflow, the U.S would respond back to Europe's higher real…

Q: 17. With respect to a country having a fixed exchange rate, which of the following state ments is…

A: A measure that is applied by a central bank or government that ties the official rate of exchange of…