Authorities to prevent its currency from falling in value

Assignment Help Business Economics

Reference no: EM131161158

In the late 1990s Thailand found that its currency, the Baht was overvalued. That is, its fundamental market value was being pushed below its stated par value. What foreign exchange intervention was required by the Thai monetary authorities to prevent its currency from falling in value? Explain the effects of this policy on the value of the Baht. Also summarize the likely effects on the Thai economy. (Use the graphical model of the short run behavior of exchange rates to show the effects of this intervention.) Why was this effort eventually unsuccessful inducing the Thai government to abandon its fixed exchange rate regime?

Reference no: EM131161158

Questions Cloud

How much will mandy save and consume in period : Mandy Marguerita lives two periods. Her initial accumulated wealth (W) in period 1 (inherited from Mom) is $ 20, and her income in period 1 is $ 90. Her income in period 2 is $ 110. Mandy does not leave bequests to her children (couple of deadbeats) ..

Shadow pricing is a key element of cost benefit analysis : Shadow pricing is a key element of cost benefit analysis. Explain what shadow pricing is and why it might be necessary to use it in a cost benefit analysis study. (B) Outline and explain two shadow pricing techniques

Which market is in excess demand : Jennifer and Drew consume orange juice and coffee. JenniferÆs MRS of orange juice for coffee is 1 and DrewÆs MRS of orange juice for coffee is 3. If the price of orange juice is $2 and the price of coffee is $3, Which market is in excess demand? Plea..

Different players impact money multiplier and money supply : Give the money multiplier and explain how the 3 different players impact the money multiplier and the money supply. Give 4 transmission mechanism and explain how each impacts the financial markets and the overall economy.

Authorities to prevent its currency from falling in value : In the late 1990s Thailand found that its currency, the Baht was overvalued. That is, its fundamental market value was being pushed below its stated par value. What foreign exchange intervention was required by the Thai monetary authorities to preven..

Hours spent calling professionals : A life-insurance salesman spends 9 hours a week on the telephone soliciting new clients. From past experience, the salesman estimates that each hour spent calling students, blue-collar workers, and professionals will produce the following number of a..

The nature of the moral hazard problem : Explain carefully, but concisely, the nature of the moral hazard problem that results from the federal deposit insurance system, explaining the roles played by both depositors and managers. Explain briefly how the problem was affected during the 1980..

What role do banks have in the process of creating money : What role do banks have in the process of creating money? Explain how a decrease in the reserve-deposit ratio affects the level of money supply. What is the textbook version of OkunÆs Law? What are the difficulties associated with estimating this ve..

Implementation of the affordable care act : As we have briefly discussed earlier in the course, fiscal policy and monetary policy are the two most commonly used tools for influencing a nation's economy. An example of fiscal policy would be increasing spending on the military or the implementat..

User Account

All Pages