A country would always prefer to have a floating exchange rate regime in operation . Discuss .

Q: Write a brief note on the differences between fixed and flexible exchange rate systems by describing…

A: Fixed exchange rate system: Under a fixed exchange rate (or pegged exchange rate) system, the…

Q: The real exchange rate is defined as: a. The nominal exchange rate plus the rate of inflation b. The…

A: Basically, the real exchange rate can be defined as the nominal exchange rate that takes the…

Q: Suppose that Country A developing country and Country B is a developed country and Country B's…

A: There is appreciation of exchange rate in country A.

Q: In the Mundell-Flemming model with floating exchange rates, explain what happens to aggregate…

A: Mundell-Flemming model is nothing but an extension of the IS-LM model which explains the working of…

Q: A country with fixed exchange rate can always raise its policy interest rate to curb down…

A: Exchange rate:- Exchange rates between different currencies indicate how strong one currency is…

Q: Assume an economy operates a fixed exchange rate regime. Assume the banking sector  increases their…

A: Answer -

Q: An exchange rate is best described as? A)The price of goods in terms of a foreign currency B)The…

A: Exchange rate is are of two types: Fixed exchange rate and Flexible exchange rate. Fixed exchange…

Q: Distinguish between nominal and real exchange rate in an open economy. Explain with the aid of a…

A: The rate at which one currency will be exchanged for another is known as the exchange rate. It is…

Q: Use the exchange rate diagram to illustrate and explain what will happen in each of the following…

A: The level of inflation has a direct impact on the exchange rates between currencies. The country…

Q: How can a nation in a flexible exchange rate regime correct the problems of inflation, recession and…

A: A Flexible Exchange rate is defined as a regime where the currency of a country is set by the…

Q: explain the determination of exchange rate using the interest parity approach .

A: Answer: According to the interest parity approach, the forward exchange rate (expected exchange…

Q: n exchange-rate system in which the nominal exchange rate is set by the government is known as a.…

A: Exchange rate is the value of one currency when expressed in terms of other currency.  When the…

Q: What will happen if exchange rate fluctuate? (please do not copy answers on the internet, thank you)

A: Exchange rate: The value of one country's currency in relation to the currency of another country or…

Q: Discuss the pros and cons of having a fixed exchange rate regime using your own words.

A: Fixed exchange rate is the system imposed by central bank or government that bind the official…

Q: In the Mundell–Fleming model with floating exchange rates, explain what happens to aggregate income,…

A: Mudell - Fleming model - This model is extension of IS-LM model . This model evaluate IS-LM model in…

Q: Economic expansion throughout the rest of the world raises the world interest rate. Use the…

A: PLEASE FIND THE ANSWER BELOW.

Q: If Bangladesh follows a fixed exchange rate and perfect capital mobility, explain with the help of…

A: A policy is a collection of concepts or strategies, specifically in politics, economics, or trade,…

Q: Explain fixed exchange rate in Malaysia.

A: A fixed exchange rate means a nominal exchange rate that is set jointly by the monetary authority…

Q: explain like the case written below, but change the fixed exchange with freely exchange rate. what…

A: The notations and subscripts are not clearly visible hence I am using my own. Please relate to that.…

Q: What are the strong and weak points of the flexible exchange rate system? What are the strong and…

A: The flexible exchange rate the changes made in the exchange  rate according to buying and selling in…

Q: Y = C (Y – T) + I (r* ) + G – NX(e) M/P = L(r*, Y) a) If the taxes are raised in this economy, and…

A: The fiscal policy would result in the change in the policies which includes taxes, government…

Q: Question: Critics of floating exchange rates claim that trade deficits are determined by the ?

A: The value of a country's currency in relation to the currency of another country or economic zone is…

Q: What will be the effect of a fixed exchange rate on the Jamaica economy. Please give recommendations…

A: A fixed exchange rate is an exchange rate system  where the exchange rate are fixed by central bank…

Q: Suppose that on January 1 2009,  the TL price of the dollar is 1.40 over    the year, inflation rate…

A: Purchasing power parity(PPP) hypothesis suggests that the exchange rate between two currencies is in…

Q: Y = C (Y – T) + I (r* ) + G – NX(e) M/P = L(r*, Y) %3D a) If the taxes are raised in this economy,…

A: The fiscal policy is involved with the policy of the taxes, government expenditure. The fiscal…

Q: When you write an exchange rate in terms of how many units of a foreign currency it takes to buy one…

A: A direct quote depicts the amount of foreign currency that can be bought for a certain unit of the…

Q: What is interest rate parity? Is it a reasonable assumption that interest rate parity holds between…

A: The theory of interest rate parity (IRP) can be explained as a fundamental analysis that helps in…

Q: In the Mundell–Fleming model with floating exchange rates, explain what happens to aggregate income,…

A: Answer -  Mundell- Fleming model - This is the extension of IS-LM model . Under this model BOP…

Q: Discuss the view that an exchange rate appreciation is always beneficial for an economy.

A: Exchange rate can be defined as the value of currency of a country in terms of the currency of…

Q: Suppose a small open economy country is in a period of economic recession, but the country has…

A: The IS curve represents the negative relationship between interest rate and real GDP where goods…

Q: For small, open economies that export and import a large volume of goods and services, a fixed…

A: In the international market, exchange rate are determine under fixed or flexible exchange rate…

Q: Draw graphs to show the effect of expansionary fiscal and monetary policies on the economy under…

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

Q: Suppose that a box of ice-cream costs £4 in the United Kingdom and the nominal exchange rate is e =…

A: Cost of one ice cream box in UK= £4 Exchange rate: £1 is equivalent to 8TL So £4 is equivalent to…