This topic contains a solution. Click here to go to the answer

Author Question: If something is a medium of exchange, then it: a. serves as a yardstick for measuring the value of ... (Read 23 times)

karen

  • Hero Member
  • *****
  • Posts: 537
If something is a medium of exchange, then it:
 a. serves as a yardstick for measuring the value of other goods.
  b. is a means of holding wealth for the future.
  c. has an absolute value in gold.
  d. is widely accepted as payment for purchases.

Question 2

Discuss the determinants of a nation's exchange rate value for its currency in foreign exchange markets. What happens to a nation's balance of trade if the nation's currency appreciates? Why?



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

joechoochoy

  • Sr. Member
  • ****
  • Posts: 306
Answer to Question 1

d

Answer to Question 2

A nation's exchange rate value is determined through the interaction of the demand and supply for the nation's currency in foreign exchange rate markets. Changes in demand and supply effect the value of the currency. The demand for the currency reflects foreign demand for the countries exports. (For example, foreigners will want to buy dollars to use for the purchase of American products.) The supply of a currency reflects the domestic demand for imports (For example, dollars are supplied by Americans to buy foreign currency used to buy imports.) Shifts in the demand and supply of foreign currency result from changes in such factors as tastes, relative price levels, relative interest rates and relative income levels.

If a currency appreciates in foreign exchange markets then the nation will experience a balance of trade deficit. For example, if the U.S. dollar appreciates (it gets stronger) then it takes fewer dollars to buy a foreign currency. Therefore, the relative price of foreign products becomes less expensive to Americans and the U.S. imports more. At the same time, because the value of the dollar has risen, it takes more nits of a foreign currency to buy a single dollar. This means that American products become more expensive to foreigners. America exports less. As imports rise and exports fall, the U.S. develops a balance of trade deficit.




karen

  • Member
  • Posts: 537
Reply 2 on: Jun 30, 2018
YES! Correct, THANKS for helping me on my review


Liddy

  • Member
  • Posts: 342
Reply 3 on: Yesterday
Wow, this really help

 

Did you know?

Many supplement containers do not even contain what their labels say. There are many documented reports of products containing much less, or more, that what is listed on their labels. They may also contain undisclosed prescription drugs and even contaminants.

Did you know?

Oxytocin is recommended only for pregnancies that have a medical reason for inducing labor (such as eclampsia) and is not recommended for elective procedures or for making the birthing process more convenient.

Did you know?

Less than one of every three adults with high LDL cholesterol has the condition under control. Only 48.1% with the condition are being treated for it.

Did you know?

The U.S. Preventive Services Task Force recommends that all women age 65 years of age or older should be screened with bone densitometry.

Did you know?

About 100 new prescription or over-the-counter drugs come into the U.S. market every year.

For a complete list of videos, visit our video library