What are some benefits of holding FX reserves (recall the Asian financial crisis of 1997)? Are there any costs and problems associated with holding too many FX reserves?
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What are some benefits of holding FX reserves (recall the Asian financial crisis of 1997)? Are there any costs and problems associated with holding too many FX reserves?
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- How does the stable inflation targeting approach impede bank flexibility? Explain the estimation of risk free rate in the global analysis of hurdle rates?What risk is due to changes in the level of interest rate in the economy and may affect industries at the same time? a.systematic risk b. inflation rate risk c.foreign exchange rate risk d.interest rate riskHas the development of the Eurodollar market made it easier ormore difficult for the Federal Reserve to control U.S. interest rates?
- although it is important to consider the impact of inflation on investments made within one country, it is especially important to do so in multinational investment situations true or false?Federal Reserve impact on inflation, growth and exchange rates: What happens to inflation, growth and exchange rates when the Federal Reserve decrease the required reserve ratio?Apart from risk components, several macroeconomic factors—such as Federal Reserve (the Fed) policy, federal budget deficit or surplus, international factors, and levels of business activity—influence interest rates. Based on your understanding of the impact of macroeconomic factors, identify which of the following statements are true or false: Statements True False Countries with strong balance sheets and declining budget deficits tend to have lower interest rates. When the economy is weakening, the Fed is likely to increase short-term interest rates. Long-term interest rates are not as sensitive to booms and recessions as are short-term interest rates. The Federal Reserve Board has a significant influence over the level of economic activity, inflation, interest rates in the United States.