--%>
Assignment Help - homework help

Domestic inflation of fixed or managed exchange Rate

Question:

A county with a fixed or managed exchange rate would consider i.___________________ its currency if the country is worried about domestic inflation. ii. Briefly Explain?

Answer:

The country will revalue its currency. This will increase the cost of its exports goods and lower the price of its imports. This will worsen the net exports and hence the aggregate demand in the economy will fall, leading to a fall in price levels and hence, inflation.

 

 

   Related Questions in Macroeconomics

  • Q : Weighed marginal cost and marginal

    Cite examples of recent decisions that you made in which you, at least implicitly, weighed marginal cost and marginal benefit?

    		•
  • Q : Business cycle What is meant by the

    What is meant by the term business cycle as described by economists?

    		•
  • Q : Demand-pull inflation What is

    What is "demand-pull" inflation?

    		•
  • Q : Define bank rate policy Define bank

    Define bank rate policy? How does it operate as a technique of credit control? Answer: Bank rate is the rate at which the central bank provides loans to the commerc

    		•
  • Q : Explain model of economy growth. The

    The origin of economic growth can be traced back to Adam Smith's Wealth of Nations. InSmith's view, economic growth of a nation depends on the 'division of labour' and specialization, and is limited by the limits of div

    		•
  • Q : Unemployment (a) Do you think that

    (a) Do you think that macroeconomic policy should be designed to achieve a measured unemployment rate of zero?

    		•
  • Q : Maximum Consumer Surplus Assume that

    Assume that you receive $18 worth of ‘jollies’ (that is, utility, satisfaction or pleasure) from the very first hole of golf played on a particular day, and that your extra jollies from succeeding the holes drops $1 for each and every hole played. You shou

    		•
  • Q : Calculating exchange rate 10 US dollars

    10 US dollars are exchanged for 500 Indian rupees. Calculate the exchange rate for Indian currency? Answer: $1 = 500/10 = Rs.50, that is, $1 = Rs. 50

    		•
  • Q : Diminishing prices raising total revenue

    Diminishing prices will raise total revenue from DVD game sales at each and every price: (1) On this demand curve. (2) Beneath $25. (3) Above $25. (4) Beneath $30.

    Q : What are the strength and weakness What

    What are the strength and weakness of using per capital national income? give explained answer for query

    		•