Do large budget necessarily lead to inflation?

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: To explain the determinants of exchange rates in the long run, analysis can be used.... a. The law…

A: Exchange rate measures the value of one country currency in terms of other country currency. For…

Q: Explain the law of one price in the perspective of the following: a) Interest rate parity

A: The law of one price is a financial idea that expresses that the cost of an indistinguishable…

Q: $ interest rate is 10%. Euro interest rate is 5%. Spot exchange rate is 2$/euro. Forward exchange…

A: The forward conversion standard is the pace of trade, settled upon now, for an unfamiliar trade…

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

A: In the international market, countries use two different approaches to set the value of their…

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: Мexico USA Good Meat Textiles Churros Cost Good Price MP9,000 MP8,000 MP4,000 Meat Textiles $500…

A: Economics studies and plans the allocation of scarce resources among humans with consumption needs.…

Q: In quoting exchange rates: Answer a. One should always quote these as units of foreign currency over…

A: In quoting exchange rates one should always quote the rate as the units of domestic currency over a…

Q: Under the fixed exchange rate regime, please explain in your own words and dra graphs for the…

A: Fixed exchange rate regime is that approach to exchange rate determination used by central banks…

Q: According to Monetary Approach to Exchange Rates, exchange rate depends on Select one a. Interest…

A: Monetary policy refers to the actions undertaken by a country's central bank to control money supply…

Q: notion of purchasing power parity only holds if…

A: Purchasing power parity means that when exchange rate is applied then cost of good in one country be…

Q: exchange rate

A: Exchange rate means the rate at which value of one country's currency is exchange for the value of…

Q: (b) Foreign exchange markets are usually stable in the long-run. The price adjustment process in…

A: (b) When the exchange rate depreciates, the adjustment of trade balance generally follows a J-curve…

Q: Assume that Canada has a fixed exchange rate regime. Explain the effect on the foreign exchange…

A: Here, it is given that the Canada has a fixed exchange rate system to make trade in international…

Q: Hi can you please help with calculations/explanations of the below :) 1. During the Great…

A: Since we can only answer one question at a time, we'll answer the first one. Please repost the…

Q: Why should Purchasing Power Parity hold in the long run? Also, why is it that Purchasing Power…

A: The purchasing power parity theory explains the exchange rate of two currencies that will be equal…

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

A: Explanation: To avoid currency crisis within the face of totally integrated capital markets, a…

Q: what is the relations between exchange rate and Bop

A: The BOP is a summary of all transactions between entities in one country and the rest of the globe…

Q: Explain with examples how to measure exchange rate risk for long positions and short positions

A: The impact of unanticipated exchange rate fluctuations on the firm's value is a standard definition…

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: Part 1 A disadvantage of a fixed exchange rate system is that O international investors cannot…

A: The fixed exchange rate is when a country ties its currency value with another widely used currency.…

Q: Define overvalued exchange rate.

A: Hello. Since your question has multiple parts, we will solve the first question for you. If you want…

Q: Is expansive monetary policy possible, if a country has a floating exchange rate

A: A floating exchange rate is when the value of a currency depends upon the demand and supply of the…

Q: The real exchange rate of Ethiopia increased by 1.9% relative to Sudan. Observing that Ethiopia's…

A: Exchange rate refers to the worth of one currency in terms of another currency. The exchange rates…

Q: Explain how the following three factors affect the Exchange rate Et in short-run in terms of…

A: The exchange rate of a currency is the value of the domestic currency in terms of the foreign…

Q: Consider Canada under a fixed exchage rate system. If people expect that the Canadian dollar will be…

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

Q: The UK pound is trading at 1.54 Canadian dollars per UK pound. There is purchasing power parity at…

A: Inflation refers to the situation of increasing price level in the economy. Exchange rate refers to…

Q: What is relationship between the current exchange rate and expected return on a foreign deposit?…

A: Current account records the inflow and outflow of goods, services, factor income, and transfer…

Q: Suppose that the Fed implements an expansionary monetary policy under the fixed exchange rate…

A: Fiscal and monetary strategies are the essential instruments legislatures use to direct the…

Q: Assume the Bobo (the currency in Boblandia) is the domestic currency. The exchange rate between the…

A: Purchasing Power Parity refers to the conversion rate of two currencies so that they can buy the…

Q: Suppose the foreign central bank increases in the foreign quantity of money, and the change is…

A: Short-run effects:• US domestic money market: With fixed price a rise in nominal money supply raises…

Q: Explain the theoretical basis for alternative exchange rate regimes and why these might change over…

A: The four different types of exchange rate regimes that existed over time are:  Fixed Flexible…

Q: True/False and Explain The exchange rate between two countries can be thought of as unrelated to any…

A: A rate at which one currency of a country can be exchanged for another is called an exchange rate.…

Q: what can we call this if any increase occur in the value of money under flexible exchange rate…

A: The price of one currency (C) in terms of another C is called the exchange rate (ER). There are two…

Q: Empirical studies find that exchange rates are much more variable then   inflation differentials.…

A: The exchange rate refers to the relative value of a currency in terms of other foreign currencies.…

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A: Macroeconomics is a sub-part of economics that is used to understand, the policies and fiscal…

Q: What is a crawling peg and how does it work? A crawling peg exchange rate policy is one that A…

A: Crawling Peg is related to the exchange rate policy.

Q: Assume that Vietnam is an open economy(i.e it trades with the rest of the world) but does not allow…

A: The Mundell-Fleming model given by Robert Mundell and Marcus Fleming tries to integrate…

Q: Discuss two models of exchange determination; one assuming fully flexible prices and one assuming…

A: Exchange rate determination- FLEXIBLE- Flexible or floating exchange rate is determined by market…