« previous next »

Author Question: Explain why exchange rates are more volatile than is suggested by the relatively simply interest ... (Read 48 times)

ARLKQ

  • Hero Member
  • *****
  • Posts: 571
on: Jun 30, 2018
Explain why exchange rates are more volatile than is suggested by the relatively simply interest parity condition presented earlier in the course.
 
  What will be an ideal response?

Question 2

If the saving rate is 1 (i.e., s = 1), we know that
 
  A) K/N will be at its highest level.
  B) Y/N will be at its highest level.
  C) C/N = 0.
  D) all of the above


frankwu0507

  • Sr. Member
  • ****
  • Posts: 322
Reply #1 on: Jun 30, 2018
Answer to Question 1

Put simply, there are more variables that can affect the current exchange rate. That is, there are variables in addition to the current domestic and foreign interest rates and one-year expected exchange rate that matter. A change in any of these variables will cause E to change.

Answer to Question 2

D


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
« previous next »
 

Did you know?

The Centers for Disease Control and Prevention (CDC) was originally known as the Communicable Disease Center, which was formed to fight malaria. It was originally headquartered in Atlanta, Georgia, since the Southern states faced the worst threat from malaria.

Did you know?

Amphetamine poisoning can cause intravascular coagulation, circulatory collapse, rhabdomyolysis, ischemic colitis, acute psychosis, hyperthermia, respiratory distress syndrome, and pericarditis.

Did you know?

Approximately one in three babies in the United States is now delivered by cesarean section. The number of cesarean sections in the United States has risen 46% since 1996.

Did you know?

In 1885, the Lloyd Manufacturing Company of Albany, New York, promoted and sold "Cocaine Toothache Drops" at 15 cents per bottle! In 1914, the Harrison Narcotic Act brought the sale and distribution of this drug under federal control.

Did you know?

Prostaglandins were first isolated from human semen in Sweden in the 1930s. They were so named because the researcher thought that they came from the prostate gland. In fact, prostaglandins exist and are synthesized in almost every cell of the body.

Gas exchange occurs at the alveolar capillary membrane. Gas exchange occurs at the alveolar capillary membrane.
Change in air temperature at various air flow rates for a 7 pass operation Change in air temperature at various air flow rates for a 7 pass operation
How to calculate present value using the compound interest formula (Question 1) How to calculate present value using the compound interest formula (Question 1)
Average Annual Growth Rates of Population by Country Group Average Annual Growth Rates of Population by Country Group
A $50 000 bond bearing interest at 6.5% bond payable semi-annually matures in 10 years. If it ... A $50 000 bond bearing interest at 6.5% bond payable semi-annually matures in 10 years. If it ...
After 159 days,she paid a maturity value of $11,626, which included interest of $814. After 159 days,she paid a maturity value of $11,626, which included interest of $814.
Video: Electrical Conduction System of the Heart

For a complete list of videos, visit our video library