Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Equilibrium Exchange Rate:
The theory of exchange rate determination explains how demand and supply of foreignexchange interact and jointly determine the equilibrium exchange rate.
As seen earlier, the demand schedule for Indian rupees (or supply schedule of foreigncurrency) arises from the foreign demand for Indian exports. Similarly, the supplyschedule of Indian rupees (or demand schedule for foreign currency) arises from theIndian demand for foreign goods or imports. Together, they determine the equilibriumexchange rate (R*)Suppose there is an exogenous increase in income in the US and therefore an increasein demand for Indian goods. Correspondingly, the demand schedule for Indian rupeesshifts to D1. The resultant equilibrium exchange rate (R*1 ) indicatesthat the Rupee has appreciated against the dollar.
Similarly, if Indian imports increase(relative to the exports) then the supply curve (SRs) shifts to the right resulting in the depreciation of Indian rupee from R2 to (R*1).Thus, in a flexible exchange rate regime, market demand for and supply of a country'scurrency determines the changes in exchange rate. As the demand and supply schedules for currency are determined by many forces, there would be a tendency for high volatilityof exchange rates in this regime. As there would be no intervention by the CentralBank in determining the exchange rate, the BoP will always be in equilibrium. It meansthat the exchange rate adjusts to make the balances in current and capital accounts sumto zero.
What should be the decent/appropriate growth rate in any country? Answer: A growth rate of among 2-3% is considered normal for mature developed countries; for LICs, 5-7% is
Because of your reputation as an expert in economic analysis, you have been hired as vice president of a business consulting firm named Economists R Us. This firm provides consult
Dependence on agricultural production: Dependence on agricultural production and primary product for exports. The external sector comprises Imports and Exports, Ghana shows de
if the inverse demand curve is p=120-Qand the marginal cost is const ant at 10 ,
Consider an economy, in which technological capabilities become obsolete. Use the Solow-Swan model and the knowledge spillover model to explain how its productivity growth rate dep
what are tne methots of demand forecasting ?
Quality Control: Standards and standardisation, quality systems, certification and inspections, measurement systems, testing laboratories, their accreditation and calibration
Elasticity- a) The price of good X goes up by 2.75%, the quantity demanded of good Y goes from 10,500 units to 25,000. What is the Exy? What does that number mean? What is th
Ask question how do I find the Price
Sources of Divergence The principal cause of extraordinary variation in output per worker between countries today are differences in their corresponding steady-state capital-ou
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!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd