How do international investment activities affect exchange rates?

Q: What is meant by the balance of payment? Why would it be useful to examine a country’s balance of…

A: please find the answer below.

Q: If the U.S. wanted to maintain a fixed exchange rate between the Euro and the Dollar, how would it…

A: A fixed exchange rate is used to strengthen and maintain a currency's exchange rate by locking its…

Q: You read in the paper that the dollar has strengthened in value relative to the euro. How is this…

A: Value of a currency states the price or interest rate at which people from different countries are…

Q: How can exchange-rate targets lead to a speculativeattack on a currency?

A: The exchange rate targeting is the method by which a central bank intervenes in the market in order…

Q: What happens to the balance of trade if the nominal exchange rate depreciates?

A: According to the Marshall-Lerner condition if the exchange rate of a country depreciates it means…

Q: Write a short note on the "Factors that influence exchange rates"

A: Exchange rate refers to the value of one currency for the purpose of conversing to another

Q: Explain how changes in interest rates are likely to affect exchange rates. ​

A: The exchange rate reflects the price of one country's currency in terms of foreign country's…

Q: What determines the value of a currency in the flexible exchange rate system ?

A: The exchange rate is the value of one country’s currency to the value another country’s currency.

Q: Is the Eurozone an “optimal” currency area and why, critically evaluate if possible.

A: An “optimal” currency area is characterized as one in which a single currency would create the…

Q: Does an expectation of a stronger exchange rate in the future affect the exchange rate in the…

A: The exchange rate refers to trading account that a country charges other country for the imports and…

Q: What's the impact on the exchange rate between the US and France if both France and the US increase…

A: The value of a country's currency to the currency of another country or economic zone is known as an…

Q: Why does exchange rates change.

A: Foreign exchange rates are determined by supply and demand. Increased demand for British goods, for…

Q: What is capital flight? When a country experiences capital flight, what is the effect on its…

A: Capital flight refers to the situation where assets or money rapidly flows out of the country…

Q: How does a fall in the exchange rate cause an increase in the cost of raw imported materials?

A: The import and export of a country are affected by the exchange rates.

Q: How do government budget deficits affect the exchange rate and trade balance?

A: The rate at which one country's currency can be exchanged for another country's currency is known as…

Q: Discuss how decisions by consumers, firms, and governments affect the balance of payments.

A: The balance of payments(BOP) situation of a country is affected by the decisions taken by different…

Q: How can a country fix its exchange rate to another? Is it sustainable for them to maintain it fixed?

A: The regime where the government fixes its exchange rate(e) with other country is called ‘Fixed…

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

A: Flexible exchange rates could be defined as exchange rates being determined by global demand and…

Q: what are some factors affecting the quantity of US dollars supplied in the foreign exchange market?

A: The foreign exchange market helps in the determination of the exchange rate for various currencies.…

Q: What’s the required condition for a country’s  Current Account Balance to improve after the…

A: When there is a devaluation of the currency, then immediately the imports of the country becomes…

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: How does a trade deficit affect floating exchange rates?

A: Trade deficit is a situation where the imports of a country exceeds the exports which states that…

Q: difference between balance of trade and balance of payments?

A: Money has been evolved since the ancient times and currently money is used as currency. There are…

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: How do changes in exchange rates affect international trade?

A: The exchange rate is determined by the demand(DD) & supply(SS) of currency. It is an important…

Q: What are two ways in which monetary policies and tight budgets allow a fixed exchange rate system to…

A: the AA-DD model to portray the impacts of financial, monetary, and exchange rate policy under an…

Q: What is the logic behind the theory of purchasing-power parity? What does purchasing-power parity…

A: The purchasing power parity theory suggest that the exchange rate of the currencies is equal to the…

Q: Exchange Rate Regimes?

A: The exchange rate between two currencies is the rate at which one currency can be traded for…

Q: chasing power parity may not fully explain exchange rate

A: Option (c). When a fresh student starts looking for job, he enter labor force and is unemployed.…

Q: what does it mean to say that a currency appreciates? Depreciates? Becomes stronger? Becomes weaker

A: Currency is known as the medium of exchange. It is accepted as a form of payment and is famous for…

Q: Long-Run Trends in the Real Exchange Rate?

A: Long Run, implies that costs of merchandise and ventures, and of the components of creation that…