How can we determine fixed exchange rate, Macroeconomics

Assignment Help:

How can we determine fixed exchange rate

If a nation has a fixed exchange rate (say against a specific currency), the government or central bank may change this fixed exchange rate. Assume that Hong Kong is our home country and that Hong Kong dollar (HKD) is fixed against USD at the exchange rate 7.8 HKD/USD (direct notation). If central bank in Hong Kong changes this exchange rate to say 8.2 HKD/USD it makes foreign currency more costly and HKD cheaper. In this case we say that HKD has been devalued. Though, if exchange rate is changed to say 8.6 HKD/USD we say that HKD has been revalued.

1988_The euro against the US dollar.png

As an example, Figure above illustrates the exchange rate between USD and euro with the euro as the base currency.

 

 


Related Discussions:- How can we determine fixed exchange rate

solow model, critically explain solow model of economic growt

critically explain solow model of economic growth

What would be due process require in circumstances, The Russ College of Eng...

The Russ College of Engineering and Technology of Ohio University announced in a press conference that it had found "rampant and flagrant plagiarism" in the theses of mechanical en

Farmer grows wheat and sells, A farmer grows wheat and sells it to a miller...

A farmer grows wheat and sells it to a miller for $1; the miller turns the wheat into flour and sells it to a baker for $3; the baker uses the flour to make bread and sells the bre

Employment, Employment  Full employment of human and non-human resource...

Employment  Full employment of human and non-human resources or at least minimization of unemployment is an accepted goal of macroeconomic policy. Also the best way to alleviat

Economy, Compare Classical economic theory to Keynesian economic theory. Wh...

Compare Classical economic theory to Keynesian economic theory. Which approach, if either is the US currently applying and what have been the effects of such policies?

Types of taxes and laffer curve, Types of Taxes Which a Government can impo...

Types of Taxes Which a Government can impose on the citizens are as follows: With the theory of taxation covered, we can now move towards the actual menu of the taxes the gover

Augmented dicky-fuller test, The hypotheses are: The null hypothesi...

The hypotheses are: The null hypothesis,  infers that a unit root exists, whereas the alternative hypothesis,  concludes that there is no root. Decision rule:

Demand for running shoes is highly inelastic, Assume that the demand for ru...

Assume that the demand for running shoes is highly inelastic and the supply curve for running shoes is highly elastic. Suppose that the tastes of the exercising public shift away f

What is fixed cost and variable cost, What is fixed cost and variable cost?...

What is fixed cost and variable cost? By the Production Function to Cost Curves: A fixed cost is a cost which does not depend onto the quantity of output generated. This i

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