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

What is the average increase, Question (a) The XYZ Election Commission ...

Question (a) The XYZ Election Commission maintains data showing the voting age population, the number of registered voters, and the turnout for federal elections. The following

Defines the stages of e-government development, QUESTION ‘To assist pol...

QUESTION ‘To assist policy makers discern e-Government initiatives in relation to their responsibility vis-à-vis other governmental issues, it is critical that the Governmen

Create the scatter graph, Create the scatter graph of the monthly return on...

Create the scatter graph of the monthly return on your corporation (on the vertical axis) versus the monthly return on the S&P 500 (on the horizontal axis)--so there should be 60 d

Theories of absolute and comparative advantage of trade, Question 1: (a...

Question 1: (a) Clearly distinguish between the theories of Absolute and Comparative advantage of trade. (b) According to you, can the ‘Factor Endowment Theory' be a reaso

Problems of lower income countries, PROBLEMS OF LOWER INCOME COUNTRIES ...

PROBLEMS OF LOWER INCOME COUNTRIES There are vast income and wealth disparities in world we live in. Approximately one-fourth of the world’s population accounts for the three-f

Jobs, How much power or influence does a U.S. President versus a company CE...

How much power or influence does a U.S. President versus a company CEO actually have in a free enterprise system, when it comes to producing jobs or the decision to manufacture co

Export, Procedure for export under deferred paymet

Procedure for export under deferred paymet

What is profitability index, The problem with the above method crops up whe...

The problem with the above method crops up when we want to compare two or more dissimilar (different sized) projects. A mega project may yield a very large NPV sum, whereas a mini

Explain the likely causes and consequences of inflation, QUESTION In se...

QUESTION In several countries recently, many people have become unemployed. Analyse the different types of unemployment in an economy. Explain the likely causes and conseque

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