A sudden speculative attack on a fixed or pegged currency causes A Currency Crisis Sudden stop crisis Debt Crisis Banking Crisis

Q: Differentiate between foreign exchange and the foreign exchange rate.

A: Foreign exchange refers to the process of converting one currency into another currency for various…

Q: Which of the following would be part of Canada's current account? a new office building purchased by…

A: A country's balance of payments, which tracks all foreign transactions between its citizens and…

Q: Who would demand U.S. dollars in the foreign exchange market? U.S. firms and households wishing to…

A: Foreign Exchange Market: The foreign exchange market can be defined as an  institution which…

Q: spot and forward exchange rates to  discuss

A: Depending on the trade operations, commodities markets have varying product prices. The product's…

Q: State reasons why countries renominate their currency

A: The process of voluntarily adjusting the face value of circulating currency is known as…

Q: Causes of the financial crisis and the need of monetary cooperation.

A: If one or even more financial institutions or entities stop operating or operate inadequately, a…

Q: Disadvantages of a single currency, for example the Eurozone

A: Macroeconomics is a part of economics that deals with production, decision and allocation concerning…

Q: What does an increase in international reserves mean

A: International reserves are the foreign currency reserves.Foreign reserves or the international…

Q: Find out any three saarc countries and find out their nominal exchange rate?

A: South Asian Association for Regional Cooperation (SAARC)  It is an intergovernmental organization…

Q: How can an unexpected fall in exchange rates injure the financial health of a nation’s banks?

A: Exchange rate determines the price of the currency of a domestic country when it is exchanged with…

Q: Discuss the future of the international monetary system.

A: International monetary policy refers to the actions and strategies implemented by central banks and…

Q: when a domestic investor buys a foreign asset, the financial account would rise, stay the same or…

A: When a domestic investor buys a foreign asset ,  the financial account status can be explained as…

Q: Compare and contrast currency crises models

A: Ever since the 1990's there have been many instances of currency crises across the globe. This…

Q: In 2007 and 2008, the international value of the dollar fell. This development was viewed with alarm…

A: Exchange rates play a major role in deciding the imports and exports of a country where the imports…

Q: Imports of goods and services is not a source of demand for foreign exchange True/False

A: The requirements for foreign currency to cover the payments is refferd to be as the demand for…

Q: The gold standard caused the fluctuations of exchange rates between countries True or false

A: In the international market, the value of a currency depends upon its demand and supply, but its…

Q: What events can ignite a currency crisis?

A: The currency crisis refers to the situation of the foreign market where there is an unexpected or…

Q: Which of the following news headlines is most likely to strengthen a country's currency in the…

A: The objective of the question is to identify which of the given news headlines would most likely…

Q: If a strike takes place in France, making it harder to buyFrench goods, what will happen to the…

A: The exchange rate refers to the value of domestic currency in terms of foreign currency. It is the…

Q: A country that allows demand and supply to determine the value of its currency is said to have a…

A: Exchange rate determines the price of the currency of a domestic country when it is exchanged with…

Q: What is the link between the foreign exchange market and the real economy

A: The foreign exchange market is the market where countries can buy, sell, exchange, and speculate the…

Q: Exchanging dollars for euros to pay a computer manufacturer in Belgium would occur at the European…

A: In the foreign exchange market, exchange rate conveys the price of a unit of one currency in terms…

Q: Relationship between exchange rate movements and interest rates

A: Exchange rate:Changes in the value of one currency in relation to another on the foreign exchange…

Q: Country Switzerland Australia Belgium Singapore Finland Germany South Korea Kuwait Vietnam Russia…

A: The currency market's importance in economics lies in its substantial influence on inflation,…

Q: If a company believed that a nation was preparing to devalue its currency, the company should reduce…

A: Meaning of Macroeconomics: The term macroeconomics refers to the situation of economic and…

IS-LM-PC Analysis

The IS (Investment Saving), LM (Liquidity Preference- Money Supply), and PC (Philips Curve) is the model that looks at the dynamics of output and inflation. It takes into account the central bank policy decision to adjust the inflation and real interest rate in the economy. It enables the economist to weather to priorities between employment and inflation rate analyzing the model. It is a practice-driven approach adopted by economists worldwide.  

IS-LM Analysis

The term IS stands for Investment, Savings, and LM stands for Liquidity Preference, Money Supply. Therefore, the term IS-LM model is known as Investment Savings – Liquidity preference money Supply. This model was introduced by a Keynesian macroeconomic theory which shows the relationship between the economic goods market and loanable funds market or money market. In other words, it shows how the market for real goods interacts with the financial markets to strike a balance between the interest rate and total output in the macroeconomy. This particular model is designed in the form of a graphical representation of the Keynesian economic theory principle. The output and money are the two important factors in an economy.