With a dirty float system,Answer1. market forces and the countryƉs stock of gold determine its exchange rate.2. central banks may intervene to affect the value of a country's currency.3. market forces do not play a role in determining the value of a currency.4. the International Monetary Fund and the Groups of Five and Seven determine fixed exchange rates.

The foreign exchange (Forex) market is a global market where firms, governments and investors trade…

Answered: With a dirty float system, Answer 1.…

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter29: Exchange Rates And International Capital Flows

Section: Chapter Questions

Problem 28CTQ: We learned that changes in exchange rates and the corresponding changes in the balance of trade...

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A central bank can allow its currency to fall indefinitely, but it cannot allow its currency to rise indefinitely. Why not?
Question With a dirty float system, Answer a. market forces and the country's stock of gold determine its exchange rate. b. central banks may intervene to affect the value of a country's currency. c. market forces do not play a role in determining the value of a currency. d. the International Monetary Fund and the Groups of Five and Seven determine fixed exchange rates.
4. The foreign exchange market has a central transaction and clearing mechanism like that of the stock market. 5. IPO (Initial Public Offering) is a way of debt financing by a company. True or false. No need to explain just answer
Choose the correct answer and give correct explaination 1. A central bank can fix an exchange rateA. In perpetuityB. Only for as long as the market believes that it has the political will to do so.C. Only for as long as it has reserves of goldD. Only for as long as it has independence of monetary policy.
Country X, an open economy, has an increase in the demand for money which led to a significant increase in the real interest rates relative to the rest of the world.a. Explain how this increase in interest rates will affect each of the following for the Country X.i. Investment ii. The international value of its currency iii. Exports
Why would a nation dollarizeâ€”that is, adopt another countrys currency instead of having its own?
A booming economy can attract financial capital inflows, which promote further growth. However, capital can just as easily flow out of the country, leading to economic recession. Is a country whose economy is booming because It decided to stimulate consumer spending more or less likely to experience capital flight than an economy whose boom Is caused by economic investment expenditure?
What are some of the reasons a central bank is likely to care, at least to some extent, about the exchange rate?
We learned that changes in exchange rates and the corresponding changes in the balance of trade amplify monetary policy. From the perspective of a nations central bank, is this a good thing or a bad thing?
Can you think of any major disadvantages to dollarization? How would a central bank work in a country that has dollarized?
What is the difference between a floating exchange rate, a soft peg, a hard peg, and dollarization?
1. Describe the law of association. What are its assumptions? 2. What is the difference between “fixed” and “floating” exchange rate regimes? 3. What are the economic consequences of money “hoarding”? 4. Briefly describe the process by which money emerges from a state of barter.

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