Principles of Economics 2e
2nd Edition
ISBN: 9781947172364
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
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Textbook Question
Chapter 29, Problem 8SCQ
A central bank can allow its currency to fall indefinitely, but it cannot allow its currency to rise indefinitely. Why not?
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A central bank can allow its currency to fall indefinitely,but it cannot allow its currency to risein definitely.Why not?
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What is the international monetary system? explain
Chapter 29 Solutions
Principles of Economics 2e
Ch. 29 - How will a stronger euro affect the following...Ch. 29 - Suppose that political unrest in Egypt leads...Ch. 29 - Suppose U.S. interest rates decline compared to...Ch. 29 - Suppose Argentina gets inflation under control and...Ch. 29 - This chapter has explained that one of the most...Ch. 29 - A booming economy can attract financial capital...Ch. 29 - How would a contractionary monetary policy affect...Ch. 29 - A central bank can allow its currency to fall...Ch. 29 - Is a country for which imports and exports...Ch. 29 - What is the foreign exchange market?
Ch. 29 - Describe some buyers and some sellers in the...Ch. 29 - What is the difference between foreign direct...Ch. 29 - What does it mean to hedge a financial...Ch. 29 - What does it mean to say that a currency...Ch. 29 - Does an expectation of a stronger exchange rate in...Ch. 29 - Does a higher rate of return in a nations economy,...Ch. 29 - Does a higher inflation rate in an economy, other...Ch. 29 - What is the purchasing power parity exchange rate?Ch. 29 - What are some of the reasons a central bank is...Ch. 29 - How can an unexpected fall in exchange rates...Ch. 29 - What is the difference between a floating exchange...Ch. 29 - List some advantages and disadvantages of the...Ch. 29 - Why would a nation dollarize—that is, adopt...Ch. 29 - Can you think of any major disadvantages to...Ch. 29 - If a countrys currency is expected to appreciate...Ch. 29 - Do you think that a country experiencing...Ch. 29 - Suppose a country has an overall balance of trade...Ch. 29 - We learned that changes in exchange rates and the...Ch. 29 - If a developing country needs foreign capital...Ch. 29 - Many developing countries, like Mexico, have...Ch. 29 - What would make a country decide to change from a...Ch. 29 - A British pound cost 2.00 in U.S. dollars in 2008,...
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Similar questions
- All of the following are factors that cause supply and demand for currencies to change EXCEPT: A. relative interest rates B. relative income levels C. relative GDP levels D. relative inflation ratesarrow_forwardWhy do Governments also use the constant dollar?arrow_forwardHow a weak currency positively affect the economy?arrow_forward
- If the chair of the U.S. Federal Reserve Board warns of an overheating economy, what will happen to the dollar? Why?arrow_forwardChoose one country, discuss the situation during pandemic and discuss how monetary policy was used to correct the recession during pandemicarrow_forwardIf the central bank were to increase the money supply in a fixed exchange rate regime, what impacts would it have on the economy? Use a diagram to explain your answer.arrow_forward
- What is the function of the International Monetary Fund?arrow_forwardWhat will happen if the people expects that the value of a currency will increase? a.There will be new monetary policies b.The supply of that currency will rise c.There will be no effect d.The demand for that currency will risearrow_forwardExplain why you agree or disagree with the following statements: A country’s currency will appreciate if its inflation rate is less than that of the rest of the world.arrow_forward
- What techniques can a central bank use to stabilize the exchange value of its currency?arrow_forwardBarbados currently used a fixed exchange rate regime. If the central bank were to increase the money supply, what impacts would it have on the economy ? Use a diagram to explain your answer.arrow_forwardIf the price of one gallon of gasoline goes down from $4.07 per gallon to $3.99 per gallon, how will that affect the value of the US dollar? Why does it affect the value of the dollar?arrow_forward
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