The greatest impact on the exchange rate

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Reference no: EM13987089

What is the probable effect of each of the following on the exchange rate of a country, other things being equal?

1. The quantity of oil imports is greatly decreased, but the value of imported oil is higher due to price increases.

2. The country's inflation rate falls well below that of its trading partners.

3. Rising labor costs of the country's manufacturers lead to a worsening ability to compete in world markets.

4. The government greatly expands its gifts of food and machinery to developing countries.

5. A major boom occurs with rising employment. The central bank raises interest rates sharply.

6. More domestic oil is discovered and developed.

7. Which two of these do you think would have the greatest impact on the exchange rate?

Reference no: EM13987089

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