Currency devaluation and revaluation on international trade

Assignment Help Macroeconomics
Reference no: EM131112995

A balance of trade (trade balance) is the difference between the monetary values of exports and imports of a country's economic output over a given period of time. Trade balance can be positive (favorable) when the value of exports is greater than the value of imports. The positive trade balance is also called trade surplus. On the other hand, if the value of imports is greater than the value of exports, the trade balance indicates trade deficit.

Trade balance affects the Gross Domestic Product (GDP) of a country because net export is a component of the GDP. Recall GDP = C + I + G + Nx

Trade balance also affects the exchange rate of a country's currency. Supply and demand for foreign currency result in changing prices of a currency. The price of a currency changes as demand for a foreign currency changes.

Based on the above summary and the detailed descriptions of the balance of payments, exchange rates and trade deficits issues in the textbook (Chapter 39) discuss the following questions.

  • Is it trade deficit or trade surplus that contributes more to economic growth? Why?
  • What are the factors that increase and decrease the demand for a foreign currency?
  • What are the impacts of currency devaluation and revaluation on international trade?
  • What is currency war? How does it affect trade between countries?

Reference no: EM131112995

Questions Cloud

What is the best way to minimize the weighted average cost : MBA 520 Module Six Forecasting Model Questions. What is the best way to minimize the weighted average cost of capital? What is the effect of the weighted average cost of capital on the market value
What is the overall change in potential energy : What is the overall change in potential energy, in ft ? lbf and Btu, of an automobile weighing 2500 lbf in a drive from San Diego, CA to Santa Fe, NM? Take g constant.
Explain how and why police corruption began : Explain how and why police corruption began and what factors within both the community and policing seem to foster and maintain it? Describe how social networking sites have affected policing and how agency policies might prevent problems.
Calculate the total compressor air mass flow : The unit must provide 1.5 kg/s bleed air and a shaft power of 200 kW. Calculate (a) the total compressor air mass flow and (b) the power available with no bleed flow, assuming the following:
Currency devaluation and revaluation on international trade : Is it trade deficit or trade surplus that contributes more to economic growth? Why? What are the factors that increase and decrease the demand for a foreign currency? What are the impacts of currency devaluation and revaluation on international trade..
Explain the security levels of the prisons : Describe the problems associated with the prisons used to incarcerate these individuals. Explain the security levels of the prisons.
What is the change in kinetic energy of the object : An object of mass 1000 kg, initially having a velocity of 100 m/s, decelerates to a final velocity of 20 m/s. What is the change in kinetic energy of the object, in kJ?
Review of china trade policies : Review of China Trade Policies, 1970-2014
Determine the force in each member of the truss : Determine the force in each member of the truss. State if the members are in tension or compression. Take that P = 550lb .Show transcribed image text Determine the force in each member of the truss. State if the members are in tension or compressio..

Reviews

Write a Review

Macroeconomics Questions & Answers

  Interest on company-issued bonds

Why can the distinction between fixed costs and variable costs be made in the short run? Classify the following as fixed or variable costs: advertising expenditures, fuel,

  Compute the point price elasticity of demand

Compute the point price elasticity of demand for bearing grease.

  Brief description of country

The student will chose a country and a MDG goal and write a 25 page (single spaced) evaluation of the countries efforts and progress in meeting this goal.  Projects will be modeled after a profession report (color graphs, bound, table of contents ect..

  Calculate the profit-maximizing production quantity

The market demand is given by P=175.3-0.003*Q and thus marginal revenue is MR=175.3-0.006*Q. The monopolist's marginal cost is MC=5.2+0.001*Q. Calculate the profit-maximizing production quantity.

  Does most of that tax fall on consumers

Draw a supply and demand diagram 2. In equilibrium, how many packs of cigarettes are purchased? What is the equilibrium price? What is consumer surplus and producer surplus in equilibrium?3. Suppose that a flat tax of $1.50 per unit is imposed on c..

  What is the firm optimal markup of price over marginal cost

If the marginal cost is $10 per unit, what is the firm's monopoly-optimal price?

  Play the social security game to solve the social security

play the social security game to solve the social security problem. detail your choices noting the whys of your choices

  Implications of various economic theories

According to CPI's estimation and in context of valuation of the major consumer products firms, do you believe analysts think the company is undervalued?

  Explore how firms in monopolistic competition differentiate

What is monopolistic competition and why/where is it different from perfect competition Explore how firms in monopolistic competition differentiate their products or services to generate a market niche and gain more control over their pricing.

  You worked for extra pay on a holiday and therefore missed

You worked for extra pay on a holiday and therefore missed out on your neighbors’ barbeque. People face trade-offs. You had to miss the barbeque to get something else that we liked.

  The demand curve for a good is given by the equation p

Suppose the demand curve for a good is given by the equation P = 300 - 1/4 Q and the supply curve is given by the equation P = 75 + 1/2 Q, where P represents the price of the good (measured in dollars per unit) and Q represents the quantity of the go..

  The cross- price elasticity of demand

Suppose the price of the good, P, increases to $2.00. Now what is the price elasticity of demand, and what is the cross-prices elasticity of demand.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd