Discuss the foreign exchange market equilibrium, Electrical Engineering

Assignment Help:

Q. To answer the following question, please refer to the figure below. Concentrating only at the upper right quadrant, discuss the foreign exchange market equilibrium.

Answer: The upper right quadrant illustrates the balance in the foreign exchange market.

We start with an Interest Parity Condition:

R$ = RE+ (Ee$/E - E$/E) / E$/E.

Generally two effects are present:

R1$ moves to R2$ and E1$/E shifts to E2$/E.

An increase in the interest rate usually creates an excess demand for dollar deposits and appreciation in the currency market.

1010_Discuss the foreign exchange market equilibrium.png

Though in this case the increase is because of higher expected inflation or higher expected financial growth in the U.S which implies a faster predictable depreciation of the dollar against the euro E thus Ee$E goes up and thus reduces the attractiveness of U.S deposits.


Related Discussions:- Discuss the foreign exchange market equilibrium

Electronic photo flash, Q. Electronic Photo Flash? A simplified schemat...

Q. Electronic Photo Flash? A simplified schematic diagram of the electric circuit of an electronic photo flash typically used on cameras is shown in Figure 7.7.1. By passing a

RLC, a 49pf cap,a 50 uH inductor, and a 100 ohms resister are in parallel: ...

a 49pf cap,a 50 uH inductor, and a 100 ohms resister are in parallel: what is the resonance freq? And what is the complex impedance vector at 100MHZ?

Determine power reflection coefficient at the input port, Determine power r...

Determine power reflection coefficient at the input port: For the MESFET equivalent circuit shown below, find S 11 and S 22 . Note that resistances associated with the voltag

How many simultaneous calls can be made during peak time, Q. In a hundred-...

Q. In a hundred-line exchange 24 two-motion selectors are used. Draw schematic you suggest for this exchange and illustrate its working. How many simultaneous calls can be made du

Bonding forces and energy bands in solids, Bonding Forces and Energy Bands ...

Bonding Forces and Energy Bands in Solids Electrons are controlled to sets of discrete energy levels in atoms, with large gaps among them in which no energy state is obta

Zener diode, where is a zener diode used in a car

where is a zener diode used in a car

Find the flux density in the air gap of the right leg, Q. In the magnetic c...

Q. In the magnetic circuit shown in Figure the center leg has the same cross-sectional area as each of the outer legs. The coil has 400 turns. The permeability of iron may be a

Calculate the voltage gain, Using the BC548B BJT transistor amplifier biasi...

Using the BC548B BJT transistor amplifier biasing circuit of Lab 2 build an amplifier with the voltage gain of  |A V | = 30 v/v ± = 10%. Measure all necessary parameters of the amp

RLC series, What is Average value in AC circuit?

What is Average value in AC circuit?

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