--%>
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 : Elucidate the ways to finance corporate

    Elucidate the ways to finance corporate activity?

    		•
  • Q : High-convexity portfolios outperform

    a) Whether the bond market moves up or down, high-convexity portfolios will for all time outperform low-convexity portfolios of equal duration and yield." Elucidate the argument supporting this statement and the connection to the classical immunization strategy. What

    		•
  • Q : Several determinants of demand besides

    Illustrate the several determinants of demand besides price which affect demand?

    		•
  • Q : Supply and demand at tax burdens and

    The new supply and demand curves within University City are S0 and D0. But after the county commission imposed at $3 per six-pack excise tax upon beer: (w) beer sellers' revenue after taxes decreases by $60,000 monthly. (x) buyers and sellers eac

    		•
  • Q : Explain about the arbitrage except

    Not like speculation, there arbitrage is: (w) an activity which is generally more lucrative when conditions are favorable. (x) a profitable and relatively riskless activity. (y) the process of representing a domestic company within fo

    		•
  • Q : Basic supply determinants of other than

    Illustrate the 6 basic supply determinants of other than price?

    		•
  • Q : Contestable Markets The least probable

    The least probable of the given industries to be a contestable market is: (1) video rentals. (2) pizza delivery. (3) cable television. (4) trucking. Can someone explain/help me with best solution about problem of <

    		•
  • Q : Assertion for the levying of a tax on

    Use the circular flow model to confirm this assertion for the levying of a tax on air polluters?

    		•
  • Q : Determine the productively efficiency

    To be productively efficient, a country should: (w) maximize the satisfaction attainable from its budget. (x) be concerned only with macroeconomic analysis. (y) concentrate on removing scarcity. (z) maximize the value of output produced through specif

    		•
  • Q : Freely Floating Currency Question: For

    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.__________

    		•