PRINCIPLES OF ECONOMICS
14th Edition
ISBN: 2810015433483
Author: OpenStax
Publisher: OpenStax
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Textbook Question
Chapter 29, Problem 8SCQ
A central bank can allow its currency to fall indefinitely, but it cannot allow its currency to rise indefinitely. Why not?
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Chapter 29 Solutions
PRINCIPLES OF ECONOMICS
Ch. 29 - How will a stronger euro affect the following...Ch. 29 - Suppose that political unrest in Egypt leads...Ch. 29 - Suppose U.S. interest rates decline compared to...Ch. 29 - Suppose Argentina gets inflation under control and...Ch. 29 - This chapter has explained that one of the most...Ch. 29 - A booming economy can attract financial capital...Ch. 29 - How would a contractionary monetary policy affect...Ch. 29 - A central bank can allow its currency to fall...Ch. 29 - Is a country for which imports and exports...Ch. 29 - What is the foreign exchange market?
Ch. 29 - Describe some buyers and some sellers in the...Ch. 29 - What is the difference between foreign direct...Ch. 29 - What does it mean to hedge a financial...Ch. 29 - What does it mean to say that a currency...Ch. 29 - Does an expectation of a stronger exchange rate in...Ch. 29 - Does a higher rate of return in a nations economy,...Ch. 29 - Does a higher inflation rate in an economy, other...Ch. 29 - What is the purchasing power parity exchange rate?Ch. 29 - What are some of the reasons a central bank is...Ch. 29 - How can an unexpected fall in exchange rates...Ch. 29 - What is the difference between a floating exchange...Ch. 29 - List some advantages and disadvantages of the...Ch. 29 - Why would a nation dollarize—that is, adopt...Ch. 29 - Can you think of any major disadvantages to...Ch. 29 - If a countrys currency is expected to appreciate...Ch. 29 - Do you think that a country experiencing...Ch. 29 - Suppose a country has an overall balance of trade...Ch. 29 - We learned that changes in exchange rates and the...Ch. 29 - If a developing country needs foreign capital...Ch. 29 - Many developing countries, like Mexico, have...Ch. 29 - What would make a country decide to change from a...Ch. 29 - A British pound cost 2.00 in U.S. dollars in 2008,...
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Similar questions
- Would each of the following groups be happy or unhappy if the U.S. dollar appreciated? Dutch pension funds holding U.S. government bonds. U.S. manufacturing industries.arrow_forwardWhat can international business people do to protect their companies from increasing inflation and a weakening dollar?arrow_forwardExplain why a country with fixed exchange rate and open financial markets has to give up its monetary policy independence?arrow_forward
- What would be a major disadvantage to dollarization? How would a central bank work in a country that has dollarized?arrow_forwardHow is it necessary for a nation with a fixed exchange rate and open financial markets to renounce its independence in terms of monetary policy?arrow_forwardIn the overshooting model, an increase in the money supply leads to higher inflation and currency depreciation. Can you think of a situation where higher inflation could lead to currency appreciation?arrow_forward
- "The value of the currency of a domestic country tends to increase if its inflation rate is significantly lower than that of other countries". Right or wrong? Explain your answer.arrow_forwardWhat will happen if the people expects that the value of a currency will increase? a.There will be new monetary policies b.The supply of that currency will rise c.There will be no effect d.The demand for that currency will risearrow_forwardUsing the Mundell-Fleming model, explain whether you think a country should pursue an expansionary monetary policy whilst at the same time fixing its exchange rate.arrow_forward
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