Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
What is the effect on a country’s economy of an artificially low
exchange rate? Of an artificially high exchange rate?
Expert Solution
Step 1
An exchange rate is the money of one country versus another country's or economic zone's currency.
Step 2
When the currency or currency is devalued, artificially decreasing or increased the exchange rate happens by the nation to have a more advantageous effect on exports or imports. If it devalues the currency, it means that exports are made more competitive.
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