Question

How the following variables affect Exchange Rate Forecasting:- 1- Money supply 2- Growth 3- Inflation rates...

How the following variables affect Exchange Rate Forecasting:-

1- Money supply

2- Growth

3- Inflation rates

4- Nominal interest rates

5- Balance-of-payments

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
2. (a) An economy’s money supply growth is 6 per cent, real output growth is 4...
2. (a) An economy’s money supply growth is 6 per cent, real output growth is 4 per cent, and nominal interest rate is 3 per cent. Find the inflation rate.                                                                 (1) Find the real interest rate.                                                            (1)         (b) How would falls of GDP growth due to Covid-19 pandemic affect inflation rate in the          economy?                                                                                                             (2)         (c) What policy would you recommend for the problem in (b)?                              (1)
1. The government of a country increases the growth rate of the money supply from 5...
1. The government of a country increases the growth rate of the money supply from 5 percent per year to 50 percent per year. What happens to prices? What happens to nominal interest rates? Why might the government be doing this? 2.List and describe six costs of inflation. /6 3.Explain how an increase in the price level affects the real value of money. /2 4.According to the quantity theory of money, what is the effect of an increase in the...
Suppose the growth rate of the money supply is 3 percent, the growth rate of velocity...
Suppose the growth rate of the money supply is 3 percent, the growth rate of velocity is 4 percent, and the growth rate of real aggregate output is 2 percent. According to the equation of exchange, the inflation rate would be _____ percent Select one: a. 7 b. 6 c. 5 d. 4 e. 3
1 (a) An economy’s money supply growth is 6 per cent, real output growth is 4...
1 (a) An economy’s money supply growth is 6 per cent, real output growth is 4 per cent, and nominal interest rate is 3 per cent. Find the inflation rate. Find the real interest rate. (b) How would falls of GDP growth due to Covid-19 pandemic affect inflation rate in the          economy? (c) What policy would you recommend for the problem in (b)?   
Imagine a country experiences a higher money supply growth rate, and so higher inflation, than other...
Imagine a country experiences a higher money supply growth rate, and so higher inflation, than other countries, year after year. Explain what would happen to the following over the long-run: (1) the nominal exchange rate, (2) the real exchange rate.
Question 3. The following Table gives information the rate of growth of the money supply and...
Question 3. The following Table gives information the rate of growth of the money supply and real income for the U.S and Europe over the next year. You should assume that all other determinants of the demand for money are constant.                                           Real income growth    Money supply growth    U.S                                     0.05                                         0.10 Europe                               0.02                                         0.04 Given this information. What is inflation in Europe? What happens to the U.S exchange rate over the next year? Suppose that the Federal Reserve wants...
Suppose that the money demand function takes the following form: [ ? ? ] ? =...
Suppose that the money demand function takes the following form: [ ? ? ] ? = ?(?, ?) = ? /5? a. What is the velocity of money in this economy? Show your work. b. If expected inflation and nominal interest rates are constant, at what rate, if any, will velocity grow? Explain your answer. c. How will a permanent (once-and-for-all) increase in the level of the nominal interest rate affect the level of velocity? How will it affect the...
Suppose that the money demand function takes the following form: [ ? ? ] ? =...
Suppose that the money demand function takes the following form: [ ? ? ] ? = ?(?, ?) = ? /5? a. What is the velocity of money in this economy? Show your work. b. If expected inflation and nominal interest rates are constant, at what rate, if any, will velocity grow? Explain your answer. c. How will a permanent (once-and-for-all) increase in the level of the nominal interest rate affect the level of velocity? How will it affect the...
1.The Fed prefers to focus on the interest rate rather than growth in the money supply...
1.The Fed prefers to focus on the interest rate rather than growth in the money supply because a.it does not like to conduct open market operations. b.the money supply is too unpredictable. c.it makes inflation more predictable. d.money demand is too volatile. e.it is easier to fix the interest rate than maintain growth in the money supply. 2. Assume the Fed has complete control over the money supply. If the demand for money were greater than the supply of money,...
One function of the foreign exchange market is to convert the currency of one country into...
One function of the foreign exchange market is to convert the currency of one country into the currency of another. A second function of the foreign exchange market is to provide insurance against foreign exchange risk. The most common approach to exchange rate forecasting is fundamental analysis. This relies on variables such as money supply growth, inflation rates, nominal interest rates, and balance-of-payment positions to predict future changes in exchange rates. Identify a country outside of the U.S. and its...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT