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

Author Question: When we no longer assume that the exchange rate expected to occur in one year is constant, explain ... (Read 78 times)

biggirl4568

  • Hero Member
  • *****
  • Posts: 551
When we no longer assume that the exchange rate expected to occur in one year is constant, explain what variables affect the current exchange rate in a flexible exchange rate regime. Include in your answer an explanation of how changes in these variables affect the current exchange rate.
 
  What will be an ideal response?

Question 2

Explain the two relations that determine the evolution of output in the long run.
 
  What will be an ideal response?



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

bigsis44

  • Sr. Member
  • ****
  • Posts: 317
Answer to Question 1

The current one-year domestic rate and future expected one-year domestic rates. Also, the current one-year foreign rate and future expected one-year foreign rates. And finally, some long-run nominal expected future exchange rate. Changes in the current one-year domestic and foreign rates have the same effect as described earlier. Changes in the future expected domestic rate will effect the exchange rate that is expected to occur at some point. This will affect the current exchange rate. The same type of analysis applies to the foreign rate. And finally, the long-run expected exchange rate will affect E as well in the same way it did before.

Answer to Question 2

The amount of capital determines the amount of output being produced. The amount of output determines the amount of saving and in turn, the amount of capital being accumulated over time.




biggirl4568

  • Member
  • Posts: 551
Reply 2 on: Jun 30, 2018
:D TYSM


pratush dev

  • Member
  • Posts: 321
Reply 3 on: Yesterday
Great answer, keep it coming :)

 

Did you know?

Looking at the sun may not only cause headache and distort your vision temporarily, but it can also cause permanent eye damage. Any exposure to sunlight adds to the cumulative effects of ultraviolet (UV) radiation on your eyes. UV exposure has been linked to eye disorders such as macular degeneration, solar retinitis, and corneal dystrophies.

Did you know?

Aspirin may benefit 11 different cancers, including those of the colon, pancreas, lungs, prostate, breasts, and leukemia.

Did you know?

Tobacco depletes the body of vitamins A, C, and E, which can result in any of the following: dry hair, dry skin, dry eyes, poor growth, night blindness, abscesses, insomnia, fatigue, reproductive system problems, sinusitis, pneumonia, frequent respiratory problems, skin disorders, weight loss, rickets, osteomalacia, nervousness, muscle spasms, leg cramps, extremity numbness, bone malformations, decayed teeth, difficulty in walking, irritability, restlessness, profuse sweating, increased uric acid (gout), joint damage, damaged red blood cells, destruction of nerves, infertility, miscarriage, and many types of cancer.

Did you know?

The longest a person has survived after a heart transplant is 24 years.

Did you know?

One way to reduce acid reflux is to lose two or three pounds. Most people lose weight in the belly area first when they increase exercise, meaning that heartburn can be reduced quickly by this method.

For a complete list of videos, visit our video library