Using the FOREX exchange rate market, applied to home country of Canada, (a) analyze the situation in which a government imposes a fixed exchange rate. Also, where the capital tends to move? Čonsider each of situations: the government imposes a fixed exchange rate which is undervalued; the government imposes a fixed exchange rate which is overvalued. (b) determine what that government should do in order to solve the capital movement as you found above in the situation with undervalued currency. Explain with words + graphs.

Using the FOREX exchange rate market, applied to home country of Canada, (a) analyze the situation in which a government imposes a fixed exchange rate. Also, where the capital tends to move? Čonsider each of situations: the government imposes a fixed exchange rate which is undervalued; the government imposes a fixed exchange rate which is overvalued. (b) determine what that government should do in order to solve the capital movement as you found above in the situation with undervalued currency. Explain with words + graphs.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Using the FOREX exchange rate market, applied
to home country of Canada,
(a) analyze the situation in which a government
imposes a fixed exchange rate. Also, where the
capital tends to move? Consider each of
situations: the government imposes a fixed
exchange rate which is undervalued; the
government imposes a fixed exchange rate which
is overvalued.
(b) determine what that government should do in
order to solve the capital movement as you found
above in the situation with undervalued currency.
Explain with words + graphs.

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