Discussion on currency issues

Reference no: EM1370388

1. Other things equal, what effect will an increase in the current account deficit have on the home currency value?
2. Determine what effect on a country's current account balance is an increase in use of quotas expected to have? Would your answer change if other governments retaliate? If so, how?
3. Which currency is used the most to denominate Eurobonds?
4. Assume that the U.S. places a strict quota on goods imported from Chile and that Chile does not retaliate. Holding other factors constant, this event will have what effect on U.S. demand for Chilean pesos? What effect on the value of the peso?
5. If a country experiences low inflation relative to the U.S., what is the expected effect on its exports to the U.S? Imports from the U.S.? Impact on its currency's equilibrium value?

Reference no: EM1370388

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