Fixed versus floating exchange rates, Macroeconomics

Assignment Help:

Fixed versus floating exchange rates:

To begin with, we will briefly review the balance of payments (BOP) table of a nation that you studied in the course on international economics as that will give us an idea of how exactly exchange rate regimes work. A country's BOP accounts summarises its dealings with the rest of the world. The BOP table has two main parts: (a) the current account and (b) the capital account.

The current account includes exports and imports of merchandise; exports and imports of services; inflows and outflows of investment income; and grants, remittances and transfers. The current account shows all flows that directly affect the national income accounts. Every transaction in the current account is an income-related flow. 

The capital account includes direct investment by foreigners into the domestic economy and direct investment by citizens in foreign countries; portfolio investment, which includes net purchases of Indian securities and net lending to Indian residents; net purchases by Indian residents of foreign securities and net lending to foreigners; and changes in cash balances. The capital account shows all flows that directly affect the national balance sheet. Every transaction in the capital account is an asset-related flow.


Related Discussions:- Fixed versus floating exchange rates

Taxes and government expenditures were constant, If taxes and government ex...

If taxes and government expenditures were constant and did not vary with income, then: A. passive deficits would increase. B. structural deficits would increase. C. passive deficit

Explain demand management of keynesian economists, Explain demand managemen...

Explain demand management of Keynesian economists The demand management of Keynesian economists of 50's and 60's is attacked by free-marketers for ignoring the importance of s

Labor supply and labor demand in the keynesian model, Supply of labor, L S ...

Supply of labor, L S (W/P), depends positively on real wages in classical model. It isn't always clear which individuals are included in the labor supply. Labor supply may consist

Annualized cost of the investment, After a competitive bidding process, Fir...

After a competitive bidding process, Firm G wins a contract to collect and dispose of Firm H's hazardous waste for $1,000 per year. Firm G's labor costs are $200 per year, and beca

What do you mean by gross domestic product, What do you mean by Gross Domes...

What do you mean by Gross Domestic Product? Gross Domestic Product: GDP stands for Gross domestic product, measures the value of all concluding goods and services produce

Issctes related to balance of payments, ISSUES RELATED TO BALANCE OF PAYMEN...

ISSUES RELATED TO BALANCE OF PAYMENTS: It  is to be remembered that the Indian economy witnessed varying intensities of BOP problem during 1956-9  1.  However over the 1990s,

Standard deviation for sample bills, Suppose the country club bills based o...

Suppose the country club bills based on a sample of 4 members are: 383, 1,051, 637, 928. What is the standard deviation for this sample of bills? (please round your answer to 1 dec

Explain the consumer prices index, Consumer Prices Index Two economic ...

Consumer Prices Index Two economic indices learnt at AS are the Consumer Prices Index (CPI) and the Retail Prices Index (RPI). Both are used to calculate the average price lev

Inflation, discuss the action the procurement function should take to achie...

discuss the action the procurement function should take to achieve raw materials at economic cost durin inflation

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd