--%>
Assignment Help - homework help

Freely Floating Currency

Question:

For a freely floating currency, currency i.____________________ occurs when the market value of a country's currency rises relative to the value of another country's currency, while currency ii._____________________ occurs when the market value of a country's currency declines relative to value of another country's currency. ii. Briefly Explain?

Answer:

(i)    Appreciation

(ii)   Depreciation

(iii)  Market value of a currency is determined by its demand and supply, in a free currency movement model. Therefore, given the fixed supply in the short run, a rise in value means that the demand is increasing, thereby increasing the price of the currency. This price increase, measured in terms of other currency, leads to appreciation of the currency. Opposite happens in the case of depreciation.

 

 

   Related Questions in Business Economics

  • Q : Describe Spillovers and externalities

    Describe Spillovers and externalities?

    		•
  • Q : How will the goods and services be

    How will the goods and services be produced?

    		•
  • Q : Surpluses in the balance of trade The

    The advocates of laissez-faire policies favor: (i) Govt. control of economy. (ii) Public ownership of all the resources. (iii) Income to be distributed according to requirement. (iv) Surpluses in the balance of trade. (v) Minimal govt. intervention in economy.

  • Q : Enterprise is dictated primarily by

    “The legal form an enterprise assumes is dictated primarily by the financial requirements of its particular line of production.”  Do you agree?

    		•
  • Q : Conception of the Invisible Hand by

    Conception of the “Invisible Hand” by Adam Smith relies on mechanisms like those as underpin: (1) William Stanley Jevons’ “sunspot” theory of business cycles. (2) the biological concept of Homeostasis. (3

    		•
  • Q : Resource markets in simple circular

    Can someone help me in finding out the right answer from the given options. In resource markets in a simple circular flow model, house-holds exchange their _________ for _________. (1) Resources | income. (2) Goods | profits. (3) Labor | goods. (4) Devotion | enlighte

    		•
  • Q : Elucidate redistribution of income

    Elucidate redistribution of income?

    		•
  • Q : What are the main sources of growth

    What are the main sources of growth?

    		•
  • Q : Why Trade barriers hurt American

    Why Trade barriers hurt American consumers?

    		•
  • Q : Importance of rationally optimal

    Economic scarcity is pervasive, that makes choices essential. Therefore, rationally optimal decisions hinge upon tradeoffs which essentially reflect: (i) cooperation to minimize human greed. (ii) opportunity costs. (iii) competitive social behavior. (

    		•