Is a depreciation of the dollar/euro exchange rate, International Economics

Assignment Help:

Is a depreciation of the dollar/euro exchange rate correlated with a decrease in the dollar return on U.S. deposits?

Answer:  No, suppose that the Interest Parity is maintained. Embracing the foreign interest rate constant one would expect a depreciation of the dollar/euro exchange rate that is an increase in E to be correlated with a decrease in the U.S interest rate and dollar returns on euro deposits. Though the higher expected inflation in the U.S imply an increase in the expected future dollar to euro exchange rate. Therefore expected depreciation increases despite a depreciation in the current dollar to euro exchange rate.

 


Related Discussions:- Is a depreciation of the dollar/euro exchange rate

Find income of landowners and real wages in each country, Q.  In Foreign an...

Q.  In Foreign and Home there are two factors of production, land and labor, used to produce only one good.  The land supply in each country and the technology of production are ex

Tariffs, critically examine the effects of tariffs on the level of employme...

critically examine the effects of tariffs on the level of employment and income distribution.

Discuss effects of ongoing inflation based on ppp theory, Discuss the effec...

Discuss the effects of ongoing inflation based on the PPP theory. Answer:  Other things equivalent money supply growth at a constant rate eventually results in ongoing price le

Substantial current account deficit, Q. What are the reasons for the world ...

Q. What are the reasons for the world as a whole running a substantial current account deficit? Answer: This deficit improved sharply in the early 1980s and has remained high.

True or false, in a mixed economy, the government tries to help meet the ne...

in a mixed economy, the government tries to help meet the needs of the public on a limited basis

Documentary collection used in international trade, Question: Tire Co L...

Question: Tire Co Ltd, a Mauritian company, is engaged in the import and distribution of tyres from TZ Co Ltd established in Mozambique. Tire Co Ltd trades since 10 years under

Who is liable for discrimination?, een subject to a discrimination complain...

een subject to a discrimination complaint as a result of their recent recruitment campaign- They told the recruitment agency that they were looking for ‘young women with flair'' to

#Tariff quota, Ask question #Effects of Tariff quota#

Ask question #Effects of Tariff quota#

International Economics Trade and Finance, critically evaluate Adam Smith''...

critically evaluate Adam Smith''s theory of absolute advantage,outlining the assumptions necessary for the theory to hold in its purest form.what are the criticisms of this theory

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