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 92 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
Thanks for the timely response, appreciate it


Liamb2179

  • Member
  • Posts: 365
Reply 3 on: Yesterday
Wow, this really help

 

Did you know?

Multiple sclerosis is a condition wherein the body's nervous system is weakened by an autoimmune reaction that attacks the myelin sheaths of neurons.

Did you know?

The most dangerous mercury compound, dimethyl mercury, is so toxic that even a few microliters spilled on the skin can cause death. Mercury has been shown to accumulate in higher amounts in the following types of fish than other types: swordfish, shark, mackerel, tilefish, crab, and tuna.

Did you know?

A serious new warning has been established for pregnant women against taking ACE inhibitors during pregnancy. In the study, the risk of major birth defects in children whose mothers took ACE inhibitors during the first trimester was nearly three times higher than in children whose mothers didn't take ACE inhibitors. Physicians can prescribe alternative medications for pregnant women who have symptoms of high blood pressure.

Did you know?

Malaria was not eliminated in the United States until 1951. The term eliminated means that no new cases arise in a country for 3 years.

Did you know?

By definition, when a medication is administered intravenously, its bioavailability is 100%.

For a complete list of videos, visit our video library