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!
Q. How A Central Bank Fixes the Exchange Rate?
Answer: The Central bank should always be willing to trade currencies at the fixed exchange rate with the private actors in the foreign exchange market to hold exchange rate constant. Presume central bank fixes exchange rate at E0. Foreign exchange market is in balance when interest parity condition holds - when R the domestic interest rate equals R* the foreign interest rate plus (Ee - E)/E, the expected rate of depreciation of the domestic currency against foreign currency.
E0 is today's balance exchange rate only if:
R = R*
To embrace the domestic interest at R* the central bank's foreign exchange intervention should adjust the money supply so that R* equates aggregate real domestic money demand and the real money supply.
MS/P = L(R*,Y)
When central bank interfere to hold exchange rate fixed it should automatically adjust the domestic money supply thus that money market equilibrium is maintained with R = R*.
The PESTEL is a strategic development technique that provides a helpful framework for analyzing the environmental pressures on an organization (Rogers, 1999). PESTEL framew
Q. Using the diagram, show what happens to the composition of production (that is quantity of cloth per 1 unit of food) in Australia once trade is established between the two coun
Q. Explain how the German Bundesbank gained its low-inflation reputation. Answer: Essentially Germany's experience with hyperinflation in the 1920s and yet again aft
Using examples, from the government, illustrate the significant opportunity cost.
The recessionary gap in a country is $1 trillion. The spending multiplier is 5. For every $50 billion borrowed, interest rates increase by 0.1 %. For every 0.1% increase in interes
Q. What are the main factors determining the aggregate money demand? Answer: Three major factors: the price level, interest rate and real national income. A increase i
why is international trade important for south africa
Assume the United States exports 1000 computers at a price of $3000 each and imports 15 UK autos at a price of 10000 pounds each. Assume that the dollar/pound exchange rate is $2 p
#question.suppose that France has a trade surplus with the United Kingdom. What would you expect to happen to price, wages, and commodity price in France? why? What would happen to
explain the source of foreign capital
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