--%>

How is the exchange rate influenced by inflation

‘The country has a floating exchange rate and its inflation rate is much higher than its trading partners. Why we would suppose the country’s exchange rate to deflate?’

E

Expert

Verified

Because of the consequence on demand and supply of currency and the new equilibrium. It distinguishes among real and nominal values.

   Related Questions in International Economics

  • Q : State the two sources of demand of

    State the two sources of demand of foreign exchange: Import of services and goods and to acquire education in abroad.

  • Q : Determining total receipts-Balance of

    When Balance of payment of a country is Rs (-) 100 crores and total payment are Rs 500 crores. Determine its total receipts.

  • Q : Gain from specialization and exchange

    If a Hawaiian can produce 50 bushels of either potatoes or pineapples per acre, whereas an Idahoan manages just 3 bushels of pineapples or 30 bushels of potatoes per acre, then: (1) Idaho’s absolute drawbacks prevent gains from specialization and exchange. (2) T

  • Q : Describe the two sources of supply of

    Describe the two sources of supply of foreign exchange: The two sources of supply of foreign exchange are: Exports and foreign tourism.

  • Q : Wars that have an impact on Global

    The professor wants to narrow it down to one or two wars that have affect global economies.

  • Q : Supply of foreign exchange Explain how

    Explain how foreign exchange rate is determined beneath flexible exchange rate system. Beneath flexible exchange rate system, the equilibrium exchange rate is found out where demand for foreign exchange is equival

  • Q : International portfolio investments 5.

    5. What are the factors responsible for the recent surge in international portfolio investment?

  • Q : Circular Flow model of a private economy

    The simple circular flow model of a private economy describes how income and resources flow among: (1) Households and business associations. (2) Corporations and government agencies. (3) Sole corporations and proprietorship (4) Business associations a

  • Q : Who was 1970 Nobel Laureate in Economics

    Who was 1970 Nobel Laureate in Economics?

  • Q : LORENZ CURVE THE AREA BETWEEN THE

    THE AREA BETWEEN THE LORENZ CURVE OF A COUNTRY AND THE DIAGONAL OF PERFECT EQUALITY REPRESENT