Author Question: Russian Rubles Because of sanctions over their involvement in Ukraine in 2014, the Bank of Russia ... (Read 253 times)

dakota nelson · **on:** Jul 1, 2018

Russian Rubles Because of sanctions over their involvement in Ukraine in 2014, the Bank of Russia has raised its benchmark interest rate from 8 to 9.5. What affect does this have on the exchange rate for the Russian Rubble versus the Euro?

Question 2

Economists disagree with constant government bailouts of large, struggling companies because it can give a rise to
a. Moral hazard
b. Adverse selection
c. Lazy managers
d. None of the above

Ddddd · **Reply #1 on:** Jul 1, 2018

Answer to Question 1

This would make investing in Russia more attractive. To the extent that they can, Europeans would seek to invest more in Russia. Of course, the sanctions attempt to limit these additional investments but they may not be perfectly enforced. This means converting more Euros for Rubbles and driving up the price of Rubbles. Likewise, this makes borrowing in Russia more expensive.

Answer to Question 2

a