What factors affect the exchange rate? What of those for exchange rate systems fixed, freely floating,...
What factors affect the exchange rate? What of those for exchange rate systems fixed, freely floating, or a dirty float would be best for Germany? And which one would be best for the US?
Homework Answers
Factors which affects exchange rates are interest rates, trade deficit and inflation and government debt.
If Germany is net exporter it is best to have floating exchange rate to achieve appreciating currency.
However if US is net importer it is best to have fixed exchange rate against particular currency to avoid excess depreciation of US dollars and maintain exchange rate within predetermined band.
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What factors affect the exchange rate? What of those for
exchange rate systems fixed, freely floating,...
Compare the advantages/disadvantages of fixed (or pegged) exchange rate versus floating exchange rate. Define what are...
Compare the advantages/disadvantages of fixed (or pegged) exchange rate versus floating exchange rate. Define what are fixed, pegged, and floating exchange rate. Provide examples.
Explain the factors affecting exchange rates in a floating exchange rate system. (more details)
Explain the factors affecting exchange rates in a floating exchange rate system. (more details)
Discuss the arguments that favor a floating exchange rate system against a fixed exchange rate system....
Discuss the arguments that favor a floating exchange rate system against a fixed exchange rate system. Present the common arguments that favor fixed exchange rates. Give specific examples to illustrate your comprehension and application of the topic.
Which factors affect the exchange rates of the Australian dollar with respect to US dollar in...
Which factors affect the exchange rates of the Australian dollar with respect to US dollar in terms of the monetary theory of exchange rate. Why the monetary theory is deficient?
2.4 Technical Float. Speaking very specifically- technically, what does a floating rate of exchange mean? What...
2.4 Technical Float. Speaking very specifically- technically, what does a floating rate of exchange mean? What is the role government?
QUESTION 2. In the late 1960s advocates of a floating exchange rate system argued that one...
QUESTION 2. In the late 1960s advocates of a floating exchange rate system argued that one advantage of a world monetary system with market determined exchange rates is that it would impose symmetry on the system. A. Discuss in what ways a system of fixed exchange rates, such as Bretton Woods, is asymmetric. What does asymmetric mean in this context? Why might it be advantageous for the world community to impose symmetry on the system? B. Do floating exchange rates...
Several factors affect the exchange rate of a currency with another currency. Which of the following...
Several factors affect the exchange rate of a currency with another currency. Which of the following statements are true about the factors that have an impact on exchange rates? Check all that apply. When a government limits imports and restricts foreign exchange transactions, its currency's value tends to increase relative to other currencies. An increase in inflation tends to increase the currency's value with respect to other currencies with lower inflation. If a government intends to prevent its currency's value...
answer the following: d. In the Mundell-Fleming model with floating exchange rates, explain what happens to...
answer the following:
d. In the Mundell-Fleming model with floating exchange rates, explain what happens to aggregate income, the exchange rate, and the trade balance when taxes are raised. What would happen if exchange rates were fixed rather than floating?
5. Understand the factors that affect exchange rates. a) Be able to determine what would happen...
5. Understand the factors that affect exchange rates. a) Be able to determine what would happen to each currency in a currency pair for changes in the different factors. e.g. if the Canadian income level decreased, while the U.S. income level remained the same, you would you expect the Canadian dollar to against the U.S. dollar. Why?
7. Fixed exchange rates Consider the exchange rate between the Saudi riyal and the euro. Suppose...
7. Fixed exchange rates Consider the exchange rate between the Saudi riyal and the euro. Suppose the Saudi government and the Eurozone governments agree to fix the exchange rate at 2.5 riyal per euro, as shown by the grey line on the following graph Refer to the following graph when answering the questions that follow. 4.0 3.5 Supply of Euros 3.0 2.5 ш2.0 O 1.5 Demand for Euros 1.0 0.5 0 2 101214 16 QUANTITY OF EUROS (Billions) At the...
Several factors affect the exchange rate of a currency with another currency. Which of the following statements are true about the factors that have an impact on exchange rates? Check all that apply. When a government limits imports and restricts foreign exchange transactions, its currency's value tends to increase relative to other currencies. An increase in inflation tends to increase the currency's value with respect to other currencies with lower inflation. If a government intends to prevent its currency's value...
answer the following:
d. In the Mundell-Fleming model with floating exchange rates, explain what happens to aggregate income, the exchange rate, and the trade balance when taxes are raised. What would happen if exchange rates were fixed rather than floating?
5. Understand the factors that affect exchange rates. a) Be able to determine what would happen to each currency in a currency pair for changes in the different factors. e.g. if the Canadian income level decreased, while the U.S. income level remained the same, you would you expect the Canadian dollar to against the U.S. dollar. Why?
7. Fixed exchange rates Consider the exchange rate between the Saudi riyal and the euro. Suppose the Saudi government and the Eurozone governments agree to fix the exchange rate at 2.5 riyal per euro, as shown by the grey line on the following graph Refer to the following graph when answering the questions that follow. 4.0 3.5 Supply of Euros 3.0 2.5 ш2.0 O 1.5 Demand for Euros 1.0 0.5 0 2 101214 16 QUANTITY OF EUROS (Billions) At the...
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