Which one of the following statements is the most accurate?
A.Depreciation is a rise in E when the exchange rate is fixed, and devaluation is a rise in E when the exchange rateB.Depreciation is a decrease in E when the exchange rate floats,...
cyxssbWhich one of the following statements is the most accurate?
A.Appreciation is a rise in E when the exchange rate floats, and revaluation is a fall in E when the exchange rate isB.Appreciation is a fall in E when the exchange rate floats, an...
cyxssbthe following statements is the most accurate?
Under fixed exchange rate, which one of the following statements is the most accurate?A.Devaluation causes a decrease in output, a decrease in official reserves, and a contraction ...
cyxssbthe following statements is the most accurate?
Under fixed exchange rate, which one of the following statements is the most accurate?A.Devaluation causes a rise inB.Devaluation causes a decrease inC.Devaluation has no effect on...
cyxssbThe main reason(s) why governments sometimes
The main reason(s) why governments sometimes chose to devalue their currencies is (are):A.devaluation allows the government to fight domestic unemployment despite the lack of effec...
cyxssbHow A Central Bank Fixes the Exchange Rate?
Answer:The Central bank must 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....
cyxssbWhat is the policy of sterilization? Give an example.
Answer:Sterilized foreign exchange intervention – policy by which central banks carry out equal foreign and domestic asset transactions in opposite directions to nullify the impac...
cyxssbExplain why under fixed exchange rate, monetary policy
Explain why under fixed exchange rate, monetary policy is ineffective whereas under floating exchange rate it is effective in risingAnswer: Under floating, by purchasing domestic a...
cyxssbuse the same figure to study an expansionary monetary policy.
Use the fixed exchange rate DD – AA model to describe the economy’s short-run equilibrium. Then, use the same figure to study an expansionary monetary policy. Show that the polic...
cyxssbDiscuss the difference in the two regimes.
Under fixed exchange rate, show using a figure, the effects of an expansionary fiscal policy. Show the equilibrium under a flexible exchange rate. Discuss the difference in the t...
cyxssbUsing a figure, show how devaluation affects an economy
Answer: When a currency is devalued from E0 to E1, the equilibrium shifts from point 1 to 2. Both output and money supply increase. And international reserves increase.
cyxssbwhat happens when Germany’s current account surplus
Under the price-specie-flow mechanism, what happens when Germany’s current account surplus is greater than its non-reserve financial account deficits?A.German loans will finance a...
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