Principles of Economics 2e
2nd Edition
ISBN: 9781947172364
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
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Textbook Question
Chapter 29, Problem 19RQ
What are some of the reasons a central bank is likely to care, at least to some extent, about the exchange rate?
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Does an expectation of a stronger exchange rate in the future affect the exchange rate in the present? If so, how?
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Chapter 29 Solutions
Principles of Economics 2e
Ch. 29 - How will a stronger euro affect the following...Ch. 29 - Suppose that political unrest in Egypt leads...Ch. 29 - Suppose U.S. interest rates decline compared to...Ch. 29 - Suppose Argentina gets inflation under control and...Ch. 29 - This chapter has explained that one of the most...Ch. 29 - A booming economy can attract financial capital...Ch. 29 - How would a contractionary monetary policy affect...Ch. 29 - A central bank can allow its currency to fall...Ch. 29 - Is a country for which imports and exports...Ch. 29 - What is the foreign exchange market?
Ch. 29 - Describe some buyers and some sellers in the...Ch. 29 - What is the difference between foreign direct...Ch. 29 - What does it mean to hedge a financial...Ch. 29 - What does it mean to say that a currency...Ch. 29 - Does an expectation of a stronger exchange rate in...Ch. 29 - Does a higher rate of return in a nations economy,...Ch. 29 - Does a higher inflation rate in an economy, other...Ch. 29 - What is the purchasing power parity exchange rate?Ch. 29 - What are some of the reasons a central bank is...Ch. 29 - How can an unexpected fall in exchange rates...Ch. 29 - What is the difference between a floating exchange...Ch. 29 - List some advantages and disadvantages of the...Ch. 29 - Why would a nation dollarize—that is, adopt...Ch. 29 - Can you think of any major disadvantages to...Ch. 29 - If a countrys currency is expected to appreciate...Ch. 29 - Do you think that a country experiencing...Ch. 29 - Suppose a country has an overall balance of trade...Ch. 29 - We learned that changes in exchange rates and the...Ch. 29 - If a developing country needs foreign capital...Ch. 29 - Many developing countries, like Mexico, have...Ch. 29 - What would make a country decide to change from a...Ch. 29 - A British pound cost 2.00 in U.S. dollars in 2008,...
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Similar questions
- What techniques can a central bank use to stabilize the exchange value of its currency?arrow_forwardWHAT IS THE IMPORTANCE OF EXCHANGE RATE IN OUR ECONOMY?arrow_forwardWhat happens to the exchange rate of a country’s currency when that country experiences high levels of inflation for an extended period of time? How will it affect the flow of that country’s currency in and out of the country? Explain your answers.arrow_forward
- How can an unexpected fall in exchange rates injure the financial health of a nation’s banks?arrow_forwardHow does interest rate affect exchange rate?arrow_forwardIn July 2018 Yi Gang, Governor of the People’s Bank of China, said fluctuations in the foreign exchange market were mainly due to factors like a stronger U.S. dollar and external uncertainties. How can fluctuations in the currency exchange rate affect a country’s economyarrow_forward
- What effect does a high exchange rate have on imports, exports, and that country's production?arrow_forwardAll of the following are factors that cause supply and demand for currencies to change EXCEPT: A. relative interest rates B. relative income levels C. relative GDP levels D. relative inflation ratesarrow_forwardFind out any three saarc countries and find out their nominal exchange rate?arrow_forward
- Economists sometimes say that the current exchange rate system is a dirty float system. What does this mean?arrow_forwardWhat are the central bank's functions? How is the exchange rate of the country managed? Do you feel this choice of exchange rate management is beneficial to the country's GDP?arrow_forwardPlease provide a short and concise answer to the following question: Why are exchange rates important in economy?arrow_forward
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