with Effect of currency depreciation What would the likely impact of a depreciation of the domestic currency be on the level of output and income and the trade balance?A. The domestic level of output and income will increase, and there will be a deterioration of the trade balance.B. The domestic level of output and income will decrease, and there will be a deterioration of the trade balance.C. The domestic level of output and income will increase, and there will be an improvement of the trade balance.D. The domestic level of output and income will decrease, and there will be an improvement of the trade balance.

Currency Depreciation:Currency depreciation refers to a decrease in the value of a country's…

Answered: What would the likely impact of a…

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter29: International Finance

Section: Chapter Questions

Problem 3P

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Similar questions

The GDP for the United States is 18,036 billion and its current account balance is 484 billion. What percent of GDP is the current account balance?
State whether each of the following events Involves a financial flow to the Mexican economy or a financial flow out of the Mexican economy: Mexico Imports sen4ces from Japan Mexico exports goods to Canada U.S. investors receive a return from past financial investments in Mexico
Imagine that the economy of Germany finds itself in the following situation: the government budget has a surplus of 1% of Germany’s GDP; private savings is 20% of GDP; and physical investment is 18% of GDP. a. Based on the national saving and investment identity, what is the current account balance? b. If the government budget surplus falls to zero, how will this affect the current account balance?
Why do you think balance of payments serves as a tool for exportation and importation?
Define each of the following terms: c. Trade deficit; devaluation; revaluation
Q5 . Explain briefly whether each of the following would be more likely to lead to a higher level of trade for an economy, or a greater imbalance of trade for an economy. a. Living in an especially large country b. Having a domestic investment rate much higher than the domestic savings rate c. Having many other large economies geographically nearby d. Having an especially large budget deficit e. Having countries with a tradition of strong protectionist legislation shutting out imports
a. Does the Philippines suffer a trade surplus or trade deficit for 2020 and first nine months of 2021? Explain.b. Does the Philippines suffer a current account surplus or current account deficit for 2020 and first nine months of 2021? c. What is the status of the Philippines Foreign Direct Investments for 2020 and first nine months of 2021? Explain. What is the status of the Philippines Foreign Portfolio Investments for 2020 and first nine months of 2021? Explain. d. What is the role of the Asia Infrastructure Investment Bank (AIIB) in the area of Global Finance? How is their financing structure different from the Asian Development Bank (ADB)?
How does a trade deficit affect floating exchange rates?
Explain why you agree or disagree with each of the following statements: a. “A nation’s currency will depreciate if its inflation rate is less than that of its trading partners.” b. “A nation whose interest rate falls more rapidly than that of other nations can expect the exchange value of its currency to depreciate.” c. “A nation that experiences higher growth rates in productivity than its trading partners can expect the exchange value of its currency to appreciate.”
Exchange Rate Effects on Trade Explain why a stronger dollar could enlarge the U.S. balance-of-trade deficit. Explain why a weaker dollar could affect the U.S. balance-of-trade deficit.

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