Question

If a country runs a trade surplus for years and follows what is called a "floating...

If a country runs a trade surplus for years and follows what is called a "floating exchange rate" what happens to the value of its currency versus other currencies?

0 0
Add a comment Improve this question Transcribed image text
Answer #1

If a country runs trade surplus for years what happens is that the country keeps on growing economic early as a result of which when compared to that of other countries the currency of the value of the currency appreciates because people would have more income now now as a result of which other country currencies depreciate against the country's currency when it follows a floating exchange rate on the whole

Add a comment
Know the answer?
Add Answer to:
If a country runs a trade surplus for years and follows what is called a "floating...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • 45. Assume that a country currently has a trade surplus. If that country experiences an expansion...

    45. Assume that a country currently has a trade surplus. If that country experiences an expansion in economic activity, what would we expect to happen to the trade surplus? Exports tend to be lower during this time, which increases the trade surplus. Nothing, because expansions do not impact the trade surplus. Exports tend to be higher during this time, which decreases the trade surplus. Imports tend to be lower during this time, which increases the trade surplus. Imports tend to...

  • Question 10 0.1 pts A country runs a trade surplus when their exports are their imports...

    Question 10 0.1 pts A country runs a trade surplus when their exports are their imports O different from equal to O smaller than larger than

  • Country G and Country H have currencies that trade freely and have markets for forward currency...

    Country G and Country H have currencies that trade freely and have markets for forward currency contracts. If Country G has an interest rate greater than that of Country H, the no-arbitrage forward G/H exchange rate is: A) greater than the G/H spot rate. B) less than the G/H spot rate. C) equal to the G/H spot rate.

  • An advantage of a floating exchange rate is that: It permits the country to conduct an...

    An advantage of a floating exchange rate is that: It permits the country to conduct an independent monetary policy It causes wages in different regions of a country to be equal It raises the value of the currency to a higher level than could be achieved with a fixed rate It prevents inflation

  • Suppose a country is experiencing a recession and a trade surplus. Further assume that the policy...

    Suppose a country is experiencing a recession and a trade surplus. Further assume that the policy makers' goals are to achieve full employment output and balanced trade. Given this information, what type of exchange rate and/or fiscal policy can be used to achieve simultaneously these two goals? Explain by drawing graphical models to further show your interpretation of this answer

  • Consider a situation where the Terms of Trade Effects Tariff Model holds for a country that...

    Consider a situation where the Terms of Trade Effects Tariff Model holds for a country that imports Commodity A. Initially, the country has trade without tariffs on Commodity A. It then changes its policy and imposes a tariff on Commodity A, while continuing to allow trade in A. Answer the following assuming there is no foreign retaliation. (a) What happens to Total Surplus for the country? Why? (b) What happens to Total Surplus for foreign exporting countries of Commodity A...

  • Consider a situation where the Terms of Trade Effects Tariff Model holds for a country that...

    Consider a situation where the Terms of Trade Effects Tariff Model holds for a country that imports Commodity A. Initially, the country has trade without tariffs on Commodity A. It then changes its policy and imposes a tariff on Commodity A, while continuing to allow trade in A. Answer the following assuming there is no foreign retaliation. (a) What happens to Total Surplus for the country? Why? (b) What happens to Total Surplus for foreign exporting countries of Commodity A...

  • 2 4 5 6 8 Quantity If the world price is $6, the producer surplus with...

    2 4 5 6 8 Quantity If the world price is $6, the producer surplus with trade equals OOOO QUESTIONS If the world price is above the domestic price. With trade, 0 The consumer surplus increases, the producer surplus decreases, and the country will export the product. 0 The consumer surplus increases, the producer surplus decreases, and the country will import the product. 0 The consumer surplus decreases, the producer surplus increases, and the country will export the product. 0...

  • (International Trade & Finance) Page 2: 2.a. Xanadu has had an overall trade surplus with the...

    (International Trade & Finance) Page 2: 2.a. Xanadu has had an overall trade surplus with the rest of the world for many years. How would a Mercantilist view this surplus? Explain! What would David Hume's argument be regarding surplus? Explain! 2. b. Dismalia is a country with an unproductive labor force. It requires more units of labor to produce a unit of any good in Dismalia than in other country. Dismalia's leaders have decided that the country cannot gain from...

  • apter 6 Name When a firm in another country outsources a function to a US company....

    apter 6 Name When a firm in another country outsources a function to a US company. Domestic price of a foreign currency. Exchange rates determined by supply and demand. That part of a country's balance of payments that includes trade, income from investments, and foreign aid. That part of a country's balance of payments that includes investments made in other countries and foreign investments in the domestic country. KEY TERMS ILI ILIIVI D d 1. Having an absolute advantage 2....

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT