The effect on international reserves, on the money supply and on the exchange rate when Federal Reserve sells dollars in the foreign exchange market but conducts an offsetting open market operation to sterilize the intervention.

Question

Want to see more full solutions like this?

Answer 1

Question

Chapter 18, Problem 1Q

To determine

The effect on international reserves, on the money supply and on the exchange rate when Federal Reserve sells dollars in the foreign exchange market but conducts an offsetting open market operation to sterilize the intervention.

Expert Solution & Answer

Explanation of Solution

The effect of the sale of dollars in foreign exchange market by Federal Reserve would increase the international reserves, money supply but would decrease the exchange rate. As the government has conducted the offsetting open market operation, it will decrease the international reserves, money supply and would increase the exchange rate and end result would be same as before. So, there would be no major change in the international reserves, money supply and exchange rate due to offsetting open market operations.

Thus, the effect on the internal reserves, on money supply and on the exchange rate would remain same under given situation.

Economics Concept Introduction

Introduction: Foreign exchange market refers to the market where the exchange of currencies takes place. It is a place where one can trade for the currencies and through which the supply and demand of a currency is determined and also determines the foreign exchange rate of that currency.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

HW Ch5 Calculate the daily total revenue when the market price is $180, $160, $140, $120, $100, $80, $60, and $40 per bippitybop. Then, use the green point (triangle symbol) to plot the daily total revenue against quantity corresponding to these market prices on the following graph. 2 @ 3840 3520 3200+ 2880 2560+ 2240 TOTAL REVENUE (Dollars) 1920 1600 1280 960 + 640+ 0 0 8 16 24 32 40 48 56 64 72 80 QUANTITY (Bippitybops per day) Total Revenue ? According to the midpoints formula, the price elasticity of demand between points A and B on the initial graph is approximately . Suppose the price of bippitybops is currently $60 per bippitybop, shown as point A on the initial graph. Because the price elasticity of demand between points A and B is , a $20-per-bippitybop decrease in price will lead to MacBook Air in total revenue per day. F2 80 F3 #3 $ 4 5 6 F6 < F7 * 8 & 27 DII 8 F8 F9 F10 61 0 W E R T Y U 0 P S D LL F G H J K L

Not use ai please

China is a leader in international trade, has one of the highest GDPs, and currently holds the largest foreign exchange reserve in the world. Is it fair for China to fix its currency by undervaluing it on the market? How does keeping its currency undervalued give it a favorable position in international trade? What about from the viewpoints of international companies and consumers?

Answer 2

Question

Chapter 18, Problem 1Q

To determine

The effect on international reserves, on the money supply and on the exchange rate when Federal Reserve sells dollars in the foreign exchange market but conducts an offsetting open market operation to sterilize the intervention.

Expert Solution & Answer

Explanation of Solution

The effect of the sale of dollars in foreign exchange market by Federal Reserve would increase the international reserves, money supply but would decrease the exchange rate. As the government has conducted the offsetting open market operation, it will decrease the international reserves, money supply and would increase the exchange rate and end result would be same as before. So, there would be no major change in the international reserves, money supply and exchange rate due to offsetting open market operations.

Thus, the effect on the internal reserves, on money supply and on the exchange rate would remain same under given situation.

Economics Concept Introduction

Introduction: Foreign exchange market refers to the market where the exchange of currencies takes place. It is a place where one can trade for the currencies and through which the supply and demand of a currency is determined and also determines the foreign exchange rate of that currency.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 18, Problem 1Q

To determine

The effect on international reserves, on the money supply and on the exchange rate when Federal Reserve sells dollars in the foreign exchange market but conducts an offsetting open market operation to sterilize the intervention.

Expert Solution & Answer

Explanation of Solution

The effect of the sale of dollars in foreign exchange market by Federal Reserve would increase the international reserves, money supply but would decrease the exchange rate. As the government has conducted the offsetting open market operation, it will decrease the international reserves, money supply and would increase the exchange rate and end result would be same as before. So, there would be no major change in the international reserves, money supply and exchange rate due to offsetting open market operations.

Thus, the effect on the internal reserves, on money supply and on the exchange rate would remain same under given situation.

Economics Concept Introduction

Introduction: Foreign exchange market refers to the market where the exchange of currencies takes place. It is a place where one can trade for the currencies and through which the supply and demand of a currency is determined and also determines the foreign exchange rate of that currency.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 18, Problem 1Q

To determine

The effect on international reserves, on the money supply and on the exchange rate when Federal Reserve sells dollars in the foreign exchange market but conducts an offsetting open market operation to sterilize the intervention.

Expert Solution & Answer

Explanation of Solution

The effect of the sale of dollars in foreign exchange market by Federal Reserve would increase the international reserves, money supply but would decrease the exchange rate. As the government has conducted the offsetting open market operation, it will decrease the international reserves, money supply and would increase the exchange rate and end result would be same as before. So, there would be no major change in the international reserves, money supply and exchange rate due to offsetting open market operations.

Thus, the effect on the internal reserves, on money supply and on the exchange rate would remain same under given situation.

Economics Concept Introduction

Introduction: Foreign exchange market refers to the market where the exchange of currencies takes place. It is a place where one can trade for the currencies and through which the supply and demand of a currency is determined and also determines the foreign exchange rate of that currency.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 18, Problem 1Q

To determine

The effect on international reserves, on the money supply and on the exchange rate when Federal Reserve sells dollars in the foreign exchange market but conducts an offsetting open market operation to sterilize the intervention.

Expert Solution & Answer

Explanation of Solution

The effect of the sale of dollars in foreign exchange market by Federal Reserve would increase the international reserves, money supply but would decrease the exchange rate. As the government has conducted the offsetting open market operation, it will decrease the international reserves, money supply and would increase the exchange rate and end result would be same as before. So, there would be no major change in the international reserves, money supply and exchange rate due to offsetting open market operations.

Thus, the effect on the internal reserves, on money supply and on the exchange rate would remain same under given situation.

Economics Concept Introduction

Introduction: Foreign exchange market refers to the market where the exchange of currencies takes place. It is a place where one can trade for the currencies and through which the supply and demand of a currency is determined and also determines the foreign exchange rate of that currency.

Answer 6

Chapter 18, Problem 1Q

To determine

The effect on international reserves, on the money supply and on the exchange rate when Federal Reserve sells dollars in the foreign exchange market but conducts an offsetting open market operation to sterilize the intervention.

Expert Solution & Answer

Explanation of Solution

The effect of the sale of dollars in foreign exchange market by Federal Reserve would increase the international reserves, money supply but would decrease the exchange rate. As the government has conducted the offsetting open market operation, it will decrease the international reserves, money supply and would increase the exchange rate and end result would be same as before. So, there would be no major change in the international reserves, money supply and exchange rate due to offsetting open market operations.

Thus, the effect on the internal reserves, on money supply and on the exchange rate would remain same under given situation.

Economics Concept Introduction

Introduction: Foreign exchange market refers to the market where the exchange of currencies takes place. It is a place where one can trade for the currencies and through which the supply and demand of a currency is determined and also determines the foreign exchange rate of that currency.

Answer 7

Chapter 18, Problem 1Q

To determine

The effect on international reserves, on the money supply and on the exchange rate when Federal Reserve sells dollars in the foreign exchange market but conducts an offsetting open market operation to sterilize the intervention.

Answer 8

Expert Solution & Answer

Explanation of Solution

The effect of the sale of dollars in foreign exchange market by Federal Reserve would increase the international reserves, money supply but would decrease the exchange rate. As the government has conducted the offsetting open market operation, it will decrease the international reserves, money supply and would increase the exchange rate and end result would be same as before. So, there would be no major change in the international reserves, money supply and exchange rate due to offsetting open market operations.

Thus, the effect on the internal reserves, on money supply and on the exchange rate would remain same under given situation.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Economics Concept Introduction

Introduction: Foreign exchange market refers to the market where the exchange of currencies takes place. It is a place where one can trade for the currencies and through which the supply and demand of a currency is determined and also determines the foreign exchange rate of that currency.

Answer 12

Ch. 18 - Prob. 1Q Ch. 18 - Prob. 2Q Ch. 18 - Prob. 3Q Ch. 18 - Prob. 4Q Ch. 18 - Prob. 5Q Ch. 18 - Prob. 6Q Ch. 18 - Prob. 7Q Ch. 18 - Prob. 8Q Ch. 18 - Prob. 9Q Ch. 18 - Prob. 10Q

The effect on international reserves, on the money supply and on the exchange rate when Federal Reserve sells dollars in the foreign exchange market but conducts an offsetting open market operation to sterilize the intervention.

The effect on international reserves, on the money supply and on the exchange rate when Federal Reserve sells dollars in the foreign exchange market but conducts an offsetting open market operation to sterilize the intervention.

Explanation of Solution

Want to see more full solutions like this?

Chapter 18 Solutions