Russia has raised the policy rate to 20%. Use a theory of exchange rate determination to explain the effect of the higher interest rate on ruble’s value. Graph or equation is required
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Russia has raised the policy rate to 20%. Use a theory of exchange rate determination to explain the effect of the higher interest rate on ruble’s value. Graph or equation is required.
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- Assume that the export price of a Toyota Corolla from Osaka, Japan is ¥4,200,000. The exchange rate is ¥109.60/$. The forecast rate of inflation in the United States is 2.5% per year and is 1.5% per year in Japan. Use this data to answer the following questions on exchange rate passthrough. What was the export price for the Corolla at the beginning of the year expressed in the U.S. Dollars? Assuming purchasing power parity holds, what should the exchange rate be at the end of the year? Assuming a 65% pass-through of the exchange rate, what will be the dollar price of a Corolla at the end of the year?Suppose that the exchange rate between Great British pound and U.S. dollar is 0.78 pounds/dollar. The price index in the United States is 264 and the price index in Britain is 277. What is the real exchange rate between pounds and dollars?Many developing countries, like Mexico, have moderate to high rates of inflation. At the same time, international trade plays an Important role In their economies. What type of exchange rate regime would be best for such a countrys currency vis Ă´ vis the U.S. dollar?
- 1 Suppose that due to a fall in the world interest rate, the equilibrium consumption of trad- ables, CT (r∗, QT1 , QT2 ), increases by 10 percent. Assume that prior to the fall in the world interest rate the economy was operating at full employment. Show that the equilibrium real wage also increases by 10 percent. Show that this result is independent of the exchange rate arrangement. To answer this question, you can use a graphical or a mathematical approach.A currency depreciates if it buys less of a foreign currency than it did before. The US dollar depreciated against what currency(a) from month 1 to month 2? Explain using the chartWhat would happen if Russian Central Bank increases interest rate by %17 to %19 to real exchange rate and expected real interest rate? (Notice that Russian inflation rate is %16)
- Question 5 If an American went back to the same Paris hotel room she enjoyed five years ago and noticed it was still priced at 100 Euros as it used to be ... and she was very very happy...why? a. the Euro had appreciated b. she's confused, she should not have been pleased at all. c. the dollar may have appreciated in value. d. the dollar had depreciatedFollowing a perao appreciation relative to dollar, which of the the following results is expected to occur A. Prices in the US would rise, and prices in Mexico would rise B. Prices in US would rise and prices in Mexico would fall C. Prices in the US would fall and prices in Mexico would rise D. Prices in the US would fall and prices in Mexico would fallof An appreciation of the dollar is usually a sign that Select one: A Canadian interest rates have increased. OB. real national income in Canada is increasing. OC. the Bank of Canada is pursuing an expansionary monetary policy. OD. D. Canadian bond prices have increased.
- Mf1. T.K. Group Bangladesh they have 15 business sectors. How do they control the possible impact of the recession, and what type of exchange rate they use possible strategy fixed exchange rate system, freely floating exchange rate system, floating exchange rate system, or pegged exchange rate system?COURSE: MACROECONOMIC - MUNDELL-FLEMING MODEL Until mid-2005, the Central Bank of China established a fixed exchange rate between its currency (yuan) and the dollar. The fixed exchange rate regime was reintroduced during the Great Recession between July 2008 and June 2010.After that date, the Chinese central bank established fluctuation bands for the yuan allowing it to move within these bands. However, the US has accused China on several occasions of taking actions to devalue its currency against the dollar.EXPLAIN and GRAPH with an open economy model with a fixed exchange rate (MUNDELL-FLEMING MODEL) the different chain effects that are generated when a country devalues its currency. From your results DETERMINE why it would be convenient for China to devalue its currency with respect to the dollar and in what way USA is harmed. Hint: according with statement on first paragrah, explain what's happens if devaluation process is defined and by Mundell-Fleming Model explain differents…Consider a positive country-specific aggregate demand shock. For a member country of a common currency area, the real exchange rate channel of adjustment to this shock is stabilizing. (Assume there is no policy response to the shock.) Draw a diagram depicting the adjustment. Also use equations.