What is capital flight? When a country experiences capital flight, what is the effect on its interest rate and exchange rate?

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: Does the level of the exchange rate matter in the long run? Why or why not?

A: When a country values its currency with another country’s currency then this situation is called…

Q: A country with fixed exchange rate can always raise its policy interest rate to curb down…

A: Exchange rate:- Exchange rates between different currencies indicate how strong one currency is…

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: An exchange rate is best described as? A)The price of goods in terms of a foreign currency B)The…

A: Exchange rate is are of two types: Fixed exchange rate and Flexible exchange rate. Fixed exchange…

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: how would this affect the US foreign exchange market ?

A: Imports: It refers to the goods and services that a country cannot produce due to which the country…

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: Describe the foreign exchange market and its components.

A: Foreign exchange market- it is a market, which is also known as forex and currency market. It is a…

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: Provide an example of a direct quote of an exchange rate

A: In the foreign exchange market, a direct quote is a rate quotation. It compares the value of one…

Q: Explain how exchange rates are determined in international business

A: Exchange rate refers to the rate at which one country's currency can be exchanged for any other…

Q: In the long run, exchange rates are typically affected by A. bond investors who seek long-term…

A: The exchange rates, in the long run, are affected by the bond investors seeking long-term returns.…

Q: Using Diagrams show the impact on a country’s exchange rate when: a. Capital movements (short term…

A: Foreign exchange market is a global market place where exchange rate of foreign currencies around…

Q: Explain how an increase in price level in a country can affect the exchange rate of the country and…

A: Macroeconomics is a part of economics that deals with production, decision and allocation concerning…

Q: explain like the case written below, but change the fixed exchange with freely exchange rate. what…

A: The notations and subscripts are not clearly visible hence I am using my own. Please relate to that.…

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

A: The flexible exchange rate the changes made in the exchange  rate according to buying and selling in…

Q: Explain why supply of foreign currency rises in response to a rise in its exchange rate?

A: Generally in the given question, The rise in exchange rate actually denotes appreciation of foreign…

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

A: Answers to the question is as follows :

Q: Please provide a short and concise answer to the following question: Why are exchange rates…

A: Exchange rate is the rate at which nation's currency are exchanged . Foreign exchange is used to…

Q: How do exchange rate movements affect economic conditions? And provide at least one way an owner of…

A: Exchange rate movements and economic conditions If the exchange rate is depreciated against foreign…

Q: Given the definition of the exchange rate , if the Canadian dollar is the domestic currency and US…

A: The exchange rate between two currencies is the price of one currency in terms of another currency.…

Q: How does covered interest arbitrage affect the exchange rates

A: By understanding the interest arbitrage and bringing in the interest arbitraging interest rate…

Q: When you write an exchange rate in terms of how many units of a foreign currency it takes to buy one…

A: A direct quote depicts the amount of foreign currency that can be bought for a certain unit of the…

Q: how might changes to the exchange rate flow through to the domestic economy? what is Y-A = X-M?

A: The Elasticity approach is related to price effect of devaluation. This approach analyses the…

Q: How do automatic adjustment mechanisms operate to correct a deficit in the balance of payments under…

A: Budget Deficit: A budget deficit arises when there is excess expenditure against the revenues. Or…

Q: What is an exchange rate? Why would a government want to maintain a fixed exchange rate? If the U.S.…

A: A fixed exchange rate is defined as a policy implemented by the government of the country or the…

Q: In the Mundell–Fleming model with floating exchange rates, explain what happens to aggregate income,…

A: Mundell Fleming model shows the short run relationship between a country’s interest rate, nominal…

Q: What is the definition of the nominal exchange rate? What would cause the demand for the foreign…

A: Nominal exchange rate: The nominal exchange rate is the amount of domestic currency needed to…

Q: What, then, determines exchange rates in the short run?

A: The exchange rate is determined by the market forces of demand and supply. After a certain stage,…

Q: How is it necessary for a nation with a fixed exchange rate and open financial markets to renounce…

A: The rate about which one currency will be swapped for another is known as the exchange rate. The…

Q: For small, open economies that export and import a large volume of goods and services, a fixed…

A: In the international market, exchange rate are determine under fixed or flexible exchange rate…

Q: Fixed Exchange rate is too expensive to be implemented," do you agree? Explain.

A: A fixed exchange rate, sometimes known as a pegged exchange rate, is an exchange rate regime in…

Q: Show graphically and explain how increasing import influence exchange rate

A: The equilibrium of trade influences cash trade rates through its effect on unfamiliar trade supply…