Question

Under the floating exchange rate system, what happens to official reserves if total payments to foreigners...

Under the floating exchange rate system, what happens to official reserves if total payments to foreigners exceed total payments from foreigners? What is likely to happen to the value of TL
Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Answer:
Under floating exchange rate system, if the total payments to the foreigners exceed total payments from foreigners the official reserves of the country will deplete (or decrease). It is the case of trade deficit where total import of the nation is more than total exports. Because of this the local currency which is TL here will become weak compare to its counterparts like US dollar or any other foreign currencies. It will also cause inflation in the country.

(plz give me a thums up...if my answer helped you and if any suggestion plz comment, Yr thums up boost me)

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
a countries central bank will need to maintain official reserves under a. pure flexible exchange rate...
a countries central bank will need to maintain official reserves under a. pure flexible exchange rate system b. dirty flexible exchange rate system c. fixed exchange rate system d. both b and c e. all of them
Question 4: Discuss the following 1- The increase in official reserves of the country is recorded...
Question 4: Discuss the following 1- The increase in official reserves of the country is recorded in the Balance of Payments in the debit side of the Official Reserve Transactions account, comment. 2- In the free floating exchange rate system, the black market for foreign currencies disappears. Discuss the validity of this phrase, explaining the reasons.
In the Mundell-Flemming model with floating exchange rates, explain what happens to aggregate income, the exchange...
In the Mundell-Flemming model with floating exchange rates, explain what happens to aggregate income, the exchange rate, and the trade balance if a quota on imported cars is implemented. Examine what would happen if exchange rates were fixed rather than floating? (10marks)
Under a fixed exchange-rate system, what automatic adjustments promote payments equilibrium?
Under a fixed exchange-rate system, what automatic adjustments promote payments equilibrium?
In a monetary model with floating exchange rates, what will happen to exchange rate, if the...
In a monetary model with floating exchange rates, what will happen to exchange rate, if the Central Bank of Turkey has decided to increase money supply? Discuss.
5. In a floating exchange rate regime between Japan and the U.S, what happens to the...
5. In a floating exchange rate regime between Japan and the U.S, what happens to the dollar in the following cases a. An increase in the purchase of electronic equipment’s from Japan Is it collect answer? A. When the U.S buys more electronics from Japan, the demand for the Japanese yen will rise and the U.S currency will depreciate because more yen is needed to buy Japanese goods and the U.S will have to convert its currency by selling U.S...
1. Under a floating exchange rate system, everything remaining constant, an increase in European exports to...
1. Under a floating exchange rate system, everything remaining constant, an increase in European exports to Japan is most likely to result in: a. a decrease in the demand for euro in the foreign exchange market. b. a decrease in the supply of euro in the foreign exchange market. c. an appreciation of the Japanese yen vis-à-vis the euro. d. an appreciation of the euro vis-à-vis the Japanese yen. 2. Economists believe that the _____ determines the price level in...
what is the managed floating exchange rate system?Please show that system's operation and create graphs about...
what is the managed floating exchange rate system?Please show that system's operation and create graphs about that system.
This question asks you to discuss a small open economy under a floating exchange rate regime....
This question asks you to discuss a small open economy under a floating exchange rate regime. What is the definition of a small open economy? What implications does this have for the interest rate? What is the difference between fixed exchange rates and floating exchange rates? In a small open economy with floatingexchange rates, what are the effects of fiscal expansion? What are the effects of monetary expansion? Explain why
What happens when there is an expansionary monetary policy under a flexible exchange rate regime to...
What happens when there is an expansionary monetary policy under a flexible exchange rate regime to the exchange rate, interest rate, consumption, investment, and net exports? Be sure to include the IS-LM-UIP diagrams in your answer.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT