Macroeconomics (7th Edition)
Macroeconomics (7th Edition)
7th Edition
ISBN: 9780134738314
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
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Chapter 19.A, Problem 8PA
To determine

Determinants of exchange rate among countries under the gold standard.

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Although it is a member of the European Community, Denmark is not part of the eurozone; it has its own currency, the krone. Because the krone is pegged to the euro, Denmark's central bank is obliged to maintain the value of the krone within 2.25 percent either above or below the value of the euro. According to an article in the Wall Street Journal, in 2017, the Danish central bank was forced to intervene in foreign currency markets "to keep the krone from strengthening too much." If the krone was strengthening, did it take more kroner to exchange for a euro or fewer kroner? Briefly explain. More kroner, because the krone has more value. Fewer kroner, because the krone has less value. Fewer kroner, because the krone has more value. More kroner, because the krone has less value.
Briefly describe the current international monetarysystem. How does the current system differ fromthe system that was in place prior to August 1971?
Define soft currency
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