When is exchange-rate targeting likely to be a sensiblestrategy for industrialized countries? When is exchangerate targeting likely to be a sensible strategy for emerging market countries?

Q: How does exchange rate fluctuation or exposure affect multinational enterprise? Discuss at least two…

A: 1A) The exchange rate of currency/monetary standards which are the mechanism of trade among…

Q: What are the key advantages of exchange-rate targetingas a monetary policy strategy?

A: Exchange rate targeting refers to the policy of the central bank of a country to keep the rate of…

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: Using examples, demonstrate how exchange rate forecasting is approached?

A: The exchange rate of a country is the price of one currency in terms of another. It is used when the…

Q: Explain with the aid of a model graph, describe the effect of changes in domestic and foreign…

A: With the increment in the rate of interest, there will be less demand for loans, and similarly, when…

Q: Explain the assumptions that "central banks cannot follow independent monetary policies in a fixed…

A: Fixed exchange rate system refers to the system in which the exchange rate of currency has been…

Q: Using the Mundell-Fleming model, explain whether you think a country should pursue an expansionary…

A: The fixed exchange rate system is when the central bank interferes and buys or sells the foreign…

Q: Which type of global exchange rate regime creates an asymmetry, with only one country able to…

A: Exchange rate: The exchange rate can be defined as the rate at which the value of the local currency…

Q: Explain how the flexible exchange rate may be use to correct disequilibrium within an economy.

A: A flexible exchange rate system is a system in which the value of the exchange rate is determined by…

Q: The Mundell-Fleming model takes the world interest rate r* as an exogenous variable. Let’s consider…

A: 1. The market forces of credit determine interest rate levels. When world production, global prices,…

Q: In the Mundell-Fleming model of the open-economy, what is:   A. The condition for equilibrium in…

A: Mundell-Fleming Model: This model describes how a small economy works when it is open to…

Q: Would it be accurate to think of a fixed exchange rate as a simultaneous price ceiling and price…

A: No, it would not be accurate to think of a fixed exchange rate as a simultaneous price ceiling and…

Q: Is expansive monetary policy possible, if a country has a floating exchange rate

A: A floating exchange rate is when the value of a currency depends upon the demand and supply of the…

Q: How can a surge in exports and decrease in imports cause an increase in aggregate demand and what…

A: Aggregate demand is defined as the total demand of all final commodities and services at a given…

Q: If the central bank were to increase the money supply in a fixed exchange rate regime, what impacts…

A: Fixed exchange-rate system is an economic system in which the currency is kept fixed i.e. it is not…

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: Give reasons, supported with clear explanations, why countries opt for a floating exchange rate?

A: The exchange rate is the rate at which domestic currency is exchanged with foreign currency in the…

Q: What is the difference between transaction demand, speculative demand, and autonomous transactions…

A: Money demand is the preferred keeping of capital wealth in the context of cash: such that, instead…

Q: How would you expect financial markets, or exchange rates to respond to inflation

A: In an economy, any change in inflation rate will have a significant effect on economic drivers such…

Q: How can the Big Mac Index explain the ability of a country's exchange rate? And how does the Big Mac…

A: The measure that depicts the value of one currency being measured in terms of another currency is…

Q: shows the expected effect on the value of the USD/EUR exchange rate under such monetary stimulus

A: Monetary Stimulus  A monetary stimulus is a strategy used by central banks to control the nation's…

Q: Assuming a flexible/floating exchange rate system, what would be the impact on the exchange rate (£)…

A: The exchange rate is the value of one currency in terms of another currency. Under a flexible…