Describe the sources of supply and demand in the market for loanable funds and the market for foreign-currency exchange. And explain why in the market for loanable funds, the supply curve has a positive slope and the demand curve has a negative slope?

Q: For given domestic and foreign interest rates, an increase in the expected price of foreign currency…

A: Since the interest rates are fixed, an increase in expected price of foreign currency in terms of…

Q: In the open-economy macroeconomic model, when there is a decrease in the real interest rate  Group…

A: The open economy macroeconomic model is used to determine the trade balance and the equilibrium…

Q: Knowing the benefits and disadvantages of Foreign Direct Investment (FDI), which of the 4 types is…

A: The foreign direct investment is considered as the investment that the companies and the firms…

Q: Foreign Direct Investment is viewed by some economic proponents as a great boost to the Balance of…

A: A foreign direct investment (FDI) is a financial investment made by a company or individual from one…

Q: What are the alternative solutions for countries to avoid or stop borrowing money? Give advantages…

A: Small business operators frequently use bank loans as a source of capital. Banks, on the other hand,…

Q: Low interest rates means low inflation which means depreciated currency. This stimulates businessmen…

A: Firstly, we need to understand the interest rate mechanism. When there is low inflation, it will be…

Q: How would each item affect the US international investment position?  Just write “increase” or…

A: Given:  US international investment position can increase, decrease or remain stable with respect to…

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: Discuss the reasons for keeping foreign exchange reserve. What are the strategies of managing…

A: Foreign exchange reserves are resources hung on hold by a central bank in foreign monetary…

Q: Give an example in the recent past when the Central Bank intervene in the foreign exchange market in…

A: Answer: Foreign exchange intervention is one of the main functions of any central bank, in this…

Q: In an economy with flexible exchange rates and imperfect capital mobility the government of this…

A: Macroeconomics is a sub-part of economics that is used to understand, the policies and fiscal…

Q: With regard to international borrowing, what are main differences between official channels and…

A: When the government, household, or any corporation of one country takes a loan or debt from the…

Q: WHAT IS THE IMPORTANCE OF EXCHANGE RATE IN OUR ECONOMY

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

Q: What variable makes the relevance/link between loanable funds market and market for foreign-currency…

A: Foreign exchange, is the transformation of one country's cash into another. In a free economy, a…

Q: Draw a diagram for Saving and Investment in a small open economy. Assume the world real interest…

A: Savings and investment is one kind of economic process in which savings is one kind of money which…

Q: What are the benefits and costs associated with foreign portfolio investment (FPI)?

A: Investments refer to the process of people or firms using some saved up money for further production…

Q: Display graphically changes in the value of domestic currency, if the domestic productivity growth…

A: The value of domestic currency reflects the relative exchange rate of that currency. It is the rate…

Q: In the Model of Open Economy (Figure 1 below), use Saving (S), Investment (1). Net Export (NX), Net…

A: Here, some of the economic activities are mentioned as demand and supply of loanable funds, and…

Q: What are the three components of the Balance of Payments? Explain the relationship between the…

A: The balance of payment (BOP) demonstrates the record of all financial proceedings over a period of…

Q: Japan has run large current account surpluses for much of the past two decades, yet no one ever asks…

A: Balance of trade of a country denotes the imports and exports of the country.

Q: All of the following are factors that cause supply and demand for currencies to change EXCEPT:   A.…

A: Gross domestic product: The total value of goods and services produced within a country' boarders…

Q: 23. Suppose the U.S. is operating in an open economy. Suddenly, there is a large decrease in…

A: In an economy, consumer expenditure refers to the total amount of money spent by individuals and…

Q: Evaluate how demand and supply in Jamaica affect and determine the country's foreign exchange rate.…

A: Understanding how demand and supply dynamics influence Jamaica's foreign exchange rate involves…

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: If Bangladesh follows a fixed exchange rate and perfect capital mobility, explain with the help of…

A: A policy is a collection of concepts or strategies, specifically in politics, economics, or trade,…

Q: oyment. In the 2008 global financial crisis, many investors considered the U.S. economy a safe place…

A: Capital flow is the movement of money for investment, trade, or business production. Capital inflow…

Q: Match the following international transactions to the correct type of foreign investment by choosing…

A: In the international financial market, investors can make an investment in two ways such as foreign…

Q: Show the effects of an increase in the world interest rate on the market for loanable funds and the…

A: The market of loanable funds is base in the concept that the market interest rate is determined by…

Q: In the Mundell-Fleming model of the open-economy, what is:   A. The condition for equilibrium in…

A: Mundell-Fleming Model: This model describes how a small economy works when it is open to…

Q: State whether each of the following events involves a financial inflow to or outflow from the Kenyan…

A: Financial flow refers to the flow of money in any form from one place to another. It could be in the…

Q: How can foreign exchange rates impact a business positively? How can foreign exchange rates have a…

A: Since you have asked multiple questions, we will solve first question for you. If you want any…

Q: What are the two most plausible reasons why countries become international lenders? What two…

A: Countries become international lenders for various reasons, often driven by economic and strategic…

Q: ) True or False? In Mankiw’s model of an open economy, the demand for loanable funds has two…

A: a) Mankiw's model of an economy, the demand for loanable funds has two components: one is the need…

Q: Chapter 3: • Production Function, Marginal Products, Factors' Demand • National Demand: Consumption,…

A: Chapter 3  Economy -Economics is a branch that understands the way a population functions by…

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: Suppose the foreign exchange market is characterized by the following equations: Qd  = 12.5 – 1.25R…

A: The foreign exchange market allows economies to exchange their currencies in terms of the foreign…

Q: Country X adopts a fixed exchange rate system. If the return on capital in a foreign country is more…

A: The rate at which one currency is being measured in terms of another currency is known as the rate…

Q: competitive effect shows how the change in exchange rate which alters the firm’s competitive…

A: Cash flow or operating cash flow of a business refers to the amount of money that the business…