Discuss the effect of capital account restrictions on attaining internal and external balance with fixed exchange rate. Show your answer on a graph and explain clearly

Q: How does the government intervene in the fixed exchange rate to keep it stable? Explain your answer…

A: Fixed exchange rate A fixed exchange rate is a type of exchange rate system in which a monetary…

Q: The demand curve for a currency will typically slope down, because, for a given future value of a…

A: The demand for a foreign currency occurs as people have to pay for the imported goods. Another…

Q: Consider the following open economy. The real exchange rate is fixed and equal to one. Consumption,…

A: At equilibrium Aggregate demand equals to aggregate supply . Where AS = Y . And trade balance is the…

Q: Nigeria has a positive trade balance of $10 billion. If it has a negative balance of services of $8…

A: Balance of trade is otherwise called net export, trade balance, or global trade balance.

Q: Look at each of the cases below from the point of view of the balance of payments for Canada.…

A: The balance of payments (BOP) is basically a record of each payment or receipt made by one…

Q: If the Federal Reserve raises interest rates, what would happen to thepeso-dollar exchange rate in…

A: The rise in the interest rate of a country makes its investment attractive. Thus, a rise in the…

Q: If a government of a country with a zero trade balance increases its budget deficit, then what will…

A: Import/export imbalances can be a decent or a terrible sign for an economy, and exchange excesses…

Q: what is the assignment problem

A: The objective of the assignment problem is the allocation of resources to an equal number of…

Q: Explain the impacts on capital flows in Hong Kong.

A: Federal reserve system: It is a system of central banking which is created by the United States of…

Q: Discuss how the value of a currency under flexible exchange rates is determined?

A: Answer: Introduction: The exchange rate refers to the price of one currency in terms of another…

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

A: The exchange rate is the rate that is used to exchange one national currency for another.

Q: Show using the Mundell-Fleming model how an increase in tariffs would affect the nominal exchange…

A: Mundell-Fleming model is the extension  of IS-LM model in the run, that is explained as follows.

Q: Explain how exchange rates can affect a firm’s global sales.

A: In the global market, products and services are traded on the basis of the exchange rate between the…

Q: What are the main arguments presented against flexible exchange rates?

A: Answers to the question is as follows :

Q: If in a country the tariff rates rises and at the same time the personal income tax rates in the…

A: If there is an increase in tariff, it makes the foreign goods costly. This will motivate the local…

Q: If a £ is cheaper in terms of a foreign currency than the equilibrium exchange rate, a exists at the…

A: If a £ is cheaper in terms of a foreign currency than the equilibrium exchange rate, a…

Q: How capital account restrictions affect attaining external and internal balance with fixed exchange…

A: Fixed exchange rate: It refers to a rate of exchange that is fixed in the economy. Gold is used by…

Q: Explain, with the aid of a graph, what will happen to the rand/dollar exchange rate and the…

A: The nations around the world tend to get involved in trade with each other, where the nations sale,…

Q: If the domestic prices for traded goods rose 40 percent over 10 years in China and 25 percent over…

A: A rise in the price of a nation leads to a fall in the value of the currency. This happens because…

Q: What is the effect of capital account restrictions on attaining internal and external balance with…

A: A FER {"fixed exchange rate"} is described as a rule that is enforced by a central bank or a…

Q: Assume that the Japanese government relaxes its controls on imports by Japanese companies. Other…

A: According to question Japanese government giving relaxation to imports to Japanese companies then…

Q: Explain why an increase in national saving (S) relative to investment (I) may lead to a current…

A: In economics, we assume the level of savings equals the level of investment. Investment needs to be…

Q: Please explain how an increase in incomes in the United States will affect equilibrium in the…

A: This will be explained through a graph below:

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 country with a fixed exchange rate decides to implement a devaluation of its currency and…

A: Devaluation is the process of reducing the currency value of the country with a fixed exchange rate.

Q: Suppose 55 percent of Mexico’s trade is with the United States, 20 percent of trade is with Canada,…

A: Percentage of Mexico's trade with the US = 55% Percentage of Mexico's trade with the Canada = 20%…

Q: import demand for a country's exchange rate

A: The rate of exchange is the rate at which one currency is exchanged in terms of others. The currency…

Q: Consider the following information about a small open economy: Y=1000; C=100+.75(Y-T); I=100-5r;…

A: Answer: Given, Y=1000;C=100+.75(Y-T);I=100-5r;G=100;T=100;NX=250-16E;r*=4. At equilibrium,…