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1.Explain: The Pegged Rate.
2. Give a example of a Pegged Rate that did not work well for a country.
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- Typed plz and asap please explain as well with high quality thanks and take care of plagiarism alsoIn Minland, the central bank lowers the interest rate from 5 per cent a year to 3 per cent a year. a.Describe in detail the steps that the Bank of Minland must follow to make the interest rate fall? b.Describe the effects of the lower interest rate on consumption expenditure and investment. c. Describe the effects of the lower interest rate on the exchange rate of the Minland dollar for the UK pound. d.Describe the effects of the change in the Minland dollar exchange rate on Minland’s net exports. e.Explain whether the change in the interest rate shifts or brings a movement along Minland’s interest-sensitive expenditure curve. f.Explain the full set of ripple effects of the interest rate cut ending with the changes in real GDP and the price level.Complete the sentence. The Canadian interest rate differential rises if ______, and the larger the Canadian interest rate differential, the ______ is the demand for Canadian dollars in the foreign exchange market. A. the Canadian interest rate falls; smaller B. the foreign interest rate falls; greater C. the foreign interest rate rises; greater D. the Canadian interest rate rises; smaller
- See for Yourself Case Taking a Bite Out of Purchasing Power Parity with the Big Mac Index In 1986, Pam Woodall introduced the Big Mac Index as an illustration of purchasing power parity (PPP), which is the theory that currencies will go up or down in value to keep their purchasing power consistent across countries. Initially a lighthearted guide to whether currencies are at their "correct" level, the Big Mac Index has grown into a global standard and is now featured in many economic textbooks and dozens of academic studies. Many refer to this as "Burgernomics." The Big Mac Index is based on the theory of PPP that says, in the long run, exchange rates should move toward the rate that would equalize the prices of an identical basket of goods and services in any two countries. This means that the price of an item in one currency should be the same price in any other currency, adjusted for that currency's exchange rate. The Big Mac Index was never intended as a precise gauge of currency…The spot rate of foreign exchange between Thailand and the United States (USA) is ฿30.7/$. The exchange rate is expected to grow by 7% over the next year. How can you describe the inflation rates, the nominal interest rates and the real rates in the USA versus Thailand?During 2018 till 2020, Malaysian exchange rate faced a depreciation. Based on this situation, what is the reason of the appreciation happen in that year?
- Suppose that the price of the three-month forward pound is $1.97. Will a U.S. investor benefit from covered interest arbitrage? (Hint: The three- 1.5%.) month U.K. interest rate is 10% = 2.5%, and the three-month U.S. interest rate is No, because there will be a loss of 2%. O Yes, the investor will benefit by 4%. O No, because there will be a loss of 3%. O No, because there will be a loss of 4%.What is the connection between the Higher net income of central bank ang foreign exchange gains?A 144.
- Question One Provide short answers: Assume the consumer price index in France rises from 250 at the end of the year to 265 at the end of the next year, how much inflation was there in France during that year? Describe the difference between a price level and a price index. Outline the theory of absolute purchasing power parity. During our discussion of absolute purchasing power parity we frequently referred to the law of one price. Write a short note on the logic of the law of one price and consider why this condition may be violated.Show how each of the following would affect the U.S. BOP. Include a description of the debit and credit items, and in each case say which specific account is affected (eg, CA, imports of goods and services, IM; FA, exports of financial assets, EXA; and so on). Suppose an American, David, is visiting Milan on business selling messenger bags to merchants. He spends a total of $800 (6500) for his hotel. David pays for his hotel using his Mastercard (held in the United States). The Milanese hotel now has a claim against Mastercard, so there is an increase in home assets owned by foreigners. In Milan, David meets with an Italian business associate, Francesco. Francesco plans to purchase a dozen of David's messenger bags (worth $120 each) for a bicycle messenger service he owns. He pays David the $1,440 using a checking account with Banca Intesa (an Italian bank). Please draw a table like the sample image (including arrows which indicate the increase or decrease) and explain a bit under…Which of the following increases the price of the dollar relative to the Mexican peso? Select oneE a. an increase in the supply of dollars b. an increase in the demand for dollars C. a decrease in the supply of pesos d. an increase in the demnand for pesos