Flexible exchange rate system, Business Economics

Assignment Help:

Flexible exchange rate system:

A country is linked to other countries through two broad channels:  trade flows andfinancial flows. Trade flows pertain to movement of goods and services betweencountries and thus facilitate exchange of products between countries, commonlyknown as  exports and  imports. When countries produce more than what they candomestically consume, they export. Similarly, when countries consume more than whatthey can produce, they import.Thus, there would be balancing of production surpluses and deficit when trade takesplace between countries.The implications of the above formulations, (i.e., trade flows) on the components ofaggregate demand (AD) would be to include net exports [i.e., exports(X) - imports(M)] such that 

AD = C + I + G + X - M

where,C: Consumption

I:Investment

G: Government Expenditure

S: SavingsThis would mean that 


Related Discussions:- Flexible exchange rate system

Is an unequal distribution of income and wealth a problem, Is an unequal di...

Is an unequal distribution of income and wealth a problem? Explain in short. Yes: because specified no government intervention, which on very low incomes cannot afford necessar

Are patterns of trade a problem, Are patterns of trade a problem? Gene...

Are patterns of trade a problem? Generalising Less Developed Countries have a comparative advantage into primary products and employment intensive manufacturing; Developed Cou

Identify the e-hr issues, QUESTION Case Study E -HR Strategy: An ...

QUESTION Case Study E -HR Strategy: An Electronic (E) Human Resource (HR) Strategy is attainable by small and medium sized business 1. Introduction This article is

Are weaknesses of financial markets a problem, Are weaknesses of financial ...

Are weaknesses of financial markets a problem? Problem: a. Potential entrepreneurs require funds to finance new projects. Financial institutions, as like banks, are middle

Economic theory, How does economic theory contributes to managerial decisio...

How does economic theory contributes to managerial decisions?

What do you mean by the term project milestone, What do you mean by the ter...

What do you mean by the term project milestone? How would you decide how many milestones to demonstrate on your project plan? Project milestone: A milestone is a point at

Consumer behavior, what makes other individuals save more than others

what makes other individuals save more than others

Distinguish between internal and external economies of scale, Use short not...

Use short notes and illustrations to answer the following questions: i) Distinguish between an indifference curve and an isoquant ii) Distinguish between substitution and inc

Explain foreign direct investment, Explain foreign direct investment: ...

Explain foreign direct investment: 1.  Identify and briefly explain three costs of foreign direct investment (FDI) for a country such as China (the home country) and two benef

Write Your Message!

Captcha
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