What are the changes in the exchange rate, Macroeconomics

Assignment Help:

What are the Changes in the exchange rate

Assume that United States is our home country and that current euro exchange rate in direct notation is SD= 1.5 (euro/USD). In indirect notation, SI= 0.667 (USD/euro). If euro becomes more expensive in terms of USD we say that USD has depreciated against euro (lost in value). This means that SD has increased (to say SD= 1.6) and that SI has fallen (to 0.625). If euro becomes less expensive we would say that USD has appreciated against the euro. In such a case, SD would fall and SI would increase. Of course, when USD depreciates against euro, the euro appreciates against the USD.

Remember:

A foreign currency is more expensive Û the domestic currency has depreciated

A foreign currency is less expensive Û the domestic currency has appreciated

 


Related Discussions:- What are the changes in the exchange rate

Nominal interest rate and expected inflation, Q. Nominal interest rate and ...

Q. Nominal interest rate and expected inflation? When we have inflation, we can't, of course, presume that expected inflation is zero. So real interest rate will no longer be e

Calculate the npv for discount rates, Shambles, a large toy retailer, are l...

Shambles, a large toy retailer, are looking at bringing out a new range of soft toys. The range under consideration is "Mythical Beasts."  The "Mythical Beasts" range will cost £50

Change of production possibilities curve affects, Analyze the relationship ...

Analyze the relationship between the production possibilities curve and the circular flow diagram. Discuss how the change of production possibilities curve affects the circular flo

GDP, Calculate the marginal cost and marginal analysis for the following ta...

Calculate the marginal cost and marginal analysis for the following table. Calculate the answers and insert them into the shaded cells. Units Produces Cost per Unit Total Cost Ma

Majority of the citizenry pays, Can democracy survive if a majority of the ...

Can democracy survive if a majority of the citizenry pays little or nothing in taxes while benefiting directly from a higher level of government spending? Why or why not?

Fiscal policy, Fiscal Policy An Increase in Government Spending: Fi...

Fiscal Policy An Increase in Government Spending: Figure 1 Let us examine how an increase in government spending affects the interest rate and the level of income.

Inflation, what are the causes of inflationary gap

what are the causes of inflationary gap

The transmission mechanism - monetary policy, The Transmission Mechanism ...

The Transmission Mechanism The mechanism by which the changes in monetary policy affect aggregate demand is called 'transmission mechanism'. Two stages in transmission mechanis

Right to sell blood, Singer suggests that although the right to sell blood ...

Singer suggests that although the right to sell blood does not threaten the formal right to give blood, it is incompatible with "the right to give blood, which cannot be bought, wh

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