Would a domestic period of very high inflation make it easier or more difficult for a country to maintain a pegged exchange rate? Explain carefully.
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Would a domestic period of very high inflation make it easier or more difficult for a country to maintain a pegged exchange rate? Explain carefully.
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- Empirical studies find that exchange rates are much more variable then inflation differentials. How can you explain this empirical result?Empirical studies find that exchange rates are much more variable then inflation differentials. How can you explain this empirical result? Thanks.Assume that the Japanese government wants to reduce inflation. Which of the following would be an appropriate action for the Japanese government? A. Sell yen for foreign currency B. Decrease interest rates C. None of the options are correct D. Buy yen with foreign currency E. Increase interest rates
- "When there is low inflation, it will be backed by low interest and an appreciated currency and not depreciated currency." Isn't this statement wrong as inflation and interest rates have an inverse relationship.Which of the following is an example of a nominal anchor? a. Inflation Rate b. Money Supply c. Exchange Rate d. All of the above are correctWhich of the following best describes the relationship between inflation and the value of the dollar? A) Inflation increases the value of the dollar while deflation decreases the value of the the dollar. B) Inflation decreases the value of the dollar while deflation increases the value of the dollar. C) Neither inflation nor deflation affect the value of the dollar. D) Both inflation and deflation increase the value of the dollar.
- Discuss the possible ways to compact inflationOver the past 20 years, Brazil has experienced relatively high inflation while Japan has experienced relatively low inflation. What do you think has happened to the number of Brazilian reais a person can buy with a Japanese yen?How does the bangko sentral ng pilipinas controls and intervene in the inflation rate of the country
- The sustained decline in U.S. inflation rates over the past quarter century likely reflected all of the following, except: (a) a combination of digitalization and technological advances that reduce production costs; (b) a weak U.S. dollar in foreign exchange markets; (c) more exact production processes; (d) globalizationSuppose the spot and three-month forward rates for the yen are ¥79.45 and ¥78.84, respectively. What would you estimate is the difference between the annual inflation rates of the United States and Japan?Relative inflation rates affect interest rates, exchange rates, the overall economic health of a country, and the operations and profitability of multinational companies. Consider the following statement: Countries with lower inflation rates will have lower interest rates. The currency of a country with a higher inflation rate than Japan’s inflation rate will (appreciate or depreciate) over time against the yen.