Why might the market exchange rate change a lot

Assignment Help International Economics
Reference no: EM13161497

A country has had a steady value for its floating exchange rate (stated inversely as the domestic currency price of foreign currency) for a number of years. The country now tightens up on (reduces) its money supply dramatically. The country's product price level is not immediately affected, but the price level gradually becomes lower (relative to what it otherwise would have been) during the next several years.

1. Why might the market exchange rate change a lot as this monetary tightening is announced and implemented?

2. What is the path of market exchange rate likely to be over the next several years? Why?

Reference no: EM13161497

Questions Cloud

State what is the ph of pure water in equilibrium : What is the pH of pure water in equilibrium with 1 atmosphere of carbon dioxide at 25?C?
How a base version of this assignment works : For this assignment you are to create an interactive moving sign in the context of a cityscape street scene. Click the link below to see how a base version of this assignment works. Type a message in the long blank slot at the top left, and then clic..
Why would chrysler have instituted this production change : Explain why Chrysler's decision might have been prompted by movements in its wage costs or capital costs, or both. Why would Chrysler have instituted this production change for its most popular
State solubility of calcite will increase with a decrease : Solubility of calcite (CaCO3) will increase with a decrease in temperature and decrease with an increase in temperature. This is because the solubility of calcite is dependent on the solubility of CO2.
Why might the market exchange rate change a lot : Why might the market exchange rate change a lot as this monetary tightening is announced and implemented and what is the path of market exchange rate likely to be over the next several years?
Manufacturer of car batteries : A manufacturer of car batteries claims that his batteries will last, on average, 3 years with a variance of 1 year. If 5 of these batteries have lifetimes of 1.9, 2.4, 3.0, 3.5, and 4.2 years
Manufacturer of car batteries : A manufacturer of car batteries claims that his batteries will last, on average, 3 years with a variance of 1 year. If 5 of these batteries have lifetimes of 1.9, 2.4, 3.0, 3.5, and 4.2 years
What is the rate law and calculate the value of the rate : what is the rate law? b) calculate the value of the rate constant c)calculate the initial rate for an experiment when both I- and OCl- are initially present at 0.15 mol/L
Which of the following could qualify as a top-down control : which of the following could qualify as a top-down control on a grassland community?

Reviews

Write a Review

International Economics Questions & Answers

  Draw a production possibilities curve for mexico

Draw a production possibilities curve for Mexico and use the two above charts to answer the following questions.

  Exchange rate quotations

A FX dealer in London normally quotes spot, 1M, 3M and 6M forward. When you ask over the phone for current quotes for YEN or USD you hear "111.43 to 51, 52 to 48, 150 to 144, 337 to 205"

  Possible production points and curve

Out of all of the possible production points along a production possibilities curve, which one of those points does a nation select and why?

  Regulating accounting firms in the wake of mismanagement

Determine the government's role be with respect to regulating accounting companies in the wake of mismanagement and accounting irregularities?

  Find the name of current wto round of trade negotiations

Determine the WTO and how its relate to international trade? Dicuss how many nations belong to the WTO? What did the Uruguay Round (1994) of WTO trade negotiations accomplish?

  Welfare gains from trade

How can this idea be applied to activities of profit making firms and profit loosing companies or to the revenue and costs components of a company's net profit?

  Brief explanation about the microsoft antitrust case

What is your opinion and brief explanation about the Microsoft antitrust case. Require your opinion about outcome and if the solution was fair? why or why not?

  Describe absolute and comparative advantage

Suppose that with a given unit of labour, India can manufacture 40 basketball hoops or 60 basketballs and Nepal can manufacture 10 basketball hoops or 30 basketballs.

  Concept of return versus risk

In two paragraphs, explain the idea of "return versus risk" and describe how you would use it in selecting a new investment portfolio. Describe how and why you used this idea when you chose your original two stocks.

  Events related to wage inequality

Examine how wage inequality is measured and if it present in your selected industry. My Selected industry is the automotive industry.

  Determine the rate of deflation

Suppose a scenario where you are an entrepreneur considering to increase your production of kitchen gadgets. You need to pay back a loan of $5,000,000 over 5-years.

  Aggregate demand slopes downward

With respect to aggregate supply and aggregate demand, what will be most likely to happen when quantity supplied exceeds the quantity demanded?

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