In situation of fixed exchange rate

Assignment Help Business Economics

Reference no: EM13853235

In a situation of a fixed exchange rate, explain why, in the monetary approach, an excess supply of money leads to a balance-of-payments deficit. Why is the deficit only temporary? How might advocates of the monetary approach explain a long-lasting deficit in the balance of payments?

Reference no: EM13853235

Questions Cloud

How much did these actions add to gdp : A US automobile factory uses $100,000 worth of parts purchased from foreign countries along with U.S. inputs to produce 30 cars worth $20,000 each. Twenty of these cars are sold and 10 are left in inventory. How much did these actions add to GDP?

Reduce the total demand for residential heating fuel : As newly appointed “Energy Czar,” your goal is to reduce the total demand for residential heating fuel in your state. You must choose one of three legislative proposals designed to accomplish this goal: a tax that would effectively increase the price..

Real gdp will increase : Real GDP will increase

Grows vegetables in his back yard : Joe and Jim purchase vegetables at a grocery store, but Jim also grows vegetables in his back yard. Regarding these two practices, which of the following statements is correct?

In situation of fixed exchange rate : In a situation of a fixed exchange rate, explain why, in the monetary approach, an excess supply of money leads to a balance-of-payments deficit. Why is the deficit only temporary? How might advocates of the monetary approach explain a long-lasting d..

Statistical discrepancy in balance-of-payment accounts : "Since the statistical discrepancy in the U.S. balance-of-payment accounts is so large, we cannot rely on the U.S. BOP statement to give information on the size of various 'balances' with any precision. Perhaps the U.S. BOP statement is essentially u..

Including the supply curve of domestic producers : Jacob Viner originally envisioned a situation where, in the demand/supply graph of a trade-diverting customs union, the demand curve was vertical and all supply curves (including the supply curve of domestic producers) were horizontal. In this situat..

Firm is only producer of high-tech sports utility vehicle : Suppose that your firm is the only producer of a high-tech sports utility vehicle for North American markets. Assume a constant marginal cost of $25,000 to produce each vehicle and no fixed costs of production.

Financial markets are not in equilibrium : If interest rates differ between two countries, it is an indication that the financial markets are not in equilibrium, and that investment flows should be taking place between the two countries. Agree? Disagree? Explain.

User Account

All Pages