MACROECONOMICS
MACROECONOMICS
14th Edition
ISBN: 9781337794985
Author: Baumol
Publisher: CENGAGE L
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Chapter 19, Problem 8DQ
To determine

To describe: The reasons the Japanese government being unhappy about the currency appreciation. With regard to this describe the actions that the Bank of Japan could have taken.

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In Belarus, the government doesn’t allow trading of its ruble outside a narrow price range, which greatly overvalues the ruble – there is a price floor on the ruble compared to euros or dollars.  Because of the floor, currency trading has dried up – who would want to sell foreign currencies for grossly overpriced Belarusian rubles?  A friend of one of my students has a web site designed to overcome rigidities in this market, a sort of Craigslist for currency.  People specify amounts they are willing to buy or sell, agree to trade at some price and arrange a meeting place.  When they meet, the trade nominally occurs at the official price floor, making the transaction nominally legal; but the person selling rubles makes extra payments to the buyer to lower the price sufficiently so that the trade actually takes place at the equilibrium price.  This is one more way in which technology helps markets circumvent imperfections and rigidities. Q: If the Belarusian government increases…
. If the Federal Reserve increases the money supply, what will happen if the value of the dollar compares to the euro?
why, according to some economists, should canada adopt the U.S dollar as its currency?
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