What three real-world complications keep purchasing power parity from being a complete explanation of exchange rate fluctuations in the long run? Explain.
143) What three real-world complications keep
144) Will the use of the euro help increase
145) South Korea, Indonesia, Malaysia, and Thailand all pegged their currencies to the dollar at one point in time. Because some of these currencies were overvalued at the pegged rate, speculators anticipated these countries would abandon the peg and speculators began selling those currencies. Explain how this speculation would affect the ability of a country to maintain a pegged exchange rate.
146) In 1991, Argentina decided to peg its currency (the Argentinean peso) to the U.S. dollar. Most of Argentina's trading, however, was with Brazil and Europe, not the United States. What result would pegging the Argentinean peso to the U.S. dollar have on the cost of imports from and exports to Brazil and Europe?
147) Why might a country raise interest rates in the face of an exchange rate crisis?
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