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.
The price of a laptop increases by 20% and there is a 40% drop in the quantity demanded.
marginal utility is applied on money or not
During a given interval a nation''s overall productivity grows at a compounded rate of 2%. Its population growth rate and degree of labor-force participation do not change over thi
Elasticity of Demand Price elasticity of demand measures percentage change in quantity demanded which results from a 1 % change in price. Price Elasticity
baumol''s theory
Just in Time Scheduling - JIT JIT techniques are being widely adopted by operations managers in manufacturing companies in the West. JIT ideas have not only had a profound im
Inflation Types Inflation is generally classified on the basis of its rate and causes, while rate-based classification of inflation refers to the severity of inflation or how h
1. Explain how the aggregate supply curve for the entire economy can be derived under; i. Classical assumption ii. Keynesian assumption 2. Explain how equilibrium can be a
The distinction between supply and the quantity supplied is best made by saying that
discuss how economic theory explains the optimum pattern of consumption of an individual consumer
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